Market Panic and On-Chain Indicators
Short-term Bitcoin holders panicked during the recent crash, sending $3.9 billion worth of BTC** to exchanges—the largest outflow since August 2024. Losses peaked at **$1.8 billion, the highest since the unwinding of the yen carry trade. The Crypto Sentiment Index also plummeted to its lowest level since August.
Despite the severe downturn on February 25, multiple on-chain metrics suggest Bitcoin (BTC) may have found its local bottom. The total crypto market cap hovered slightly above $2.7 trillion** (~¥405 trillion at ¥150/$1), down nearly $1 trillion** (~¥150 trillion) from its December 2024 peak.
Key Analyst Insights
Andre Dragosch, Head of Research at Bitwise, noted that the Crypto Sentiment Index hit its lowest level since August 2024, coinciding with Bitcoin’s previous bottom at $49,000:
"The Crypto Sentiment Index flashed a strong buy-the-dip signal for Bitcoin. Broad-based bearishness across flows, on-chain data, and derivatives suggests limited downside risk. At this price, the risk-reward outlook appears highly favorable."
Losses and Investor Behavior
Glassnode data reveals investors suffered $1.8 billion** (~¥270 billion) in losses on February 25—the **largest single-day loss** since August 2024 (when the yen carry trade unwind caused **$3.2 billion in losses).
Additionally, short-term holders (investors holding BTC for <155 days) transferred 43,600 BTC ($3.9 billion, ~¥585 billion) to exchanges—the highest volume since August 2024.
👉 Why On-Chain Data Matters for Bitcoin Investors
FAQs
1. What does ‘local bottom’ mean in crypto markets?
A local bottom refers to a temporary low point in price before a rebound, often signaled by extreme fear or capitulation.
2. How reliable are on-chain metrics for predicting bottoms?
While not infallible, metrics like exchange outflows and sentiment indices provide strong historical correlations with market reversals.
3. Should investors buy during extreme fear?
Data suggests buying during panic (e.g., when the Sentiment Index is low) has historically yielded strong mid-term returns.
Conclusion
These indicators are critical for spotting potential market bottoms, hinting that Bitcoin may be nearing a pivotal recovery phase.