Bitcoin fell below $62,000 on Friday, briefly touching $61,100, as weakening demand and rising selling pressure from short-term holders weighed on the market. The cryptocurrency has since recovered slightly to trade above $62,000, but the broader trend remains bearish amid a risk-off environment across global markets.
Demand Contraction Hits 501K BTC
On-chain data from CryptoQuant reveals a significant contraction in Bitcoin demand. Spot demand has fallen to -272,000 BTC on a 30-day cumulative basis, while futures demand dropped to -229,000 BTC. Total demand contraction now stands at approximately 501,000 BTC, the weakest level in the current cycle. This indicates that selling pressure has consistently outpaced buying activity throughout most of the year, even during periods of institutional inflows.
Analysts attribute the decline to negative macroeconomic conditions, including elevated bond yields, persistent inflation, and geopolitical uncertainty. In this environment, liquidity has shifted toward equities—particularly tech and AI stocks—as well as forex and precious metals. For context, the broader market selloff has also impacted other assets, as seen in the Dow Jones dropping 486 points amid an AI-led tech selloff.
Short-Term Holders Capitulate
On-chain behavior shows that short-term holders (STHs) have undergone one of the largest capitulation events of the year. Around 53,800 BTC were sent to exchanges at a loss, while inflows from profitable positions dropped to near zero. This pattern reflects growing panic among recent buyers as unrealized losses deepen. Historically, similar capitulation events have often appeared near local market bottoms, though analysts caution they are not reliable reversal signals on their own.
Continued selling could extend the correction if demand fails to recover. However, oversold conditions may indicate that a bottom is approaching. Market sentiment weakened further after Strategy disclosed its first Bitcoin sale in over four years, selling 32 BTC to fund preferred stock dividend payments. The company’s Bitcoin holdings are now facing an estimated $10.8 billion unrealized loss.
Technical Outlook: Bearish Structure Intact
The BTC/USD 4-hour chart remains extremely bearish, with Bitcoin trading below the 20, 50, and 100-day exponential moving averages. These averages form a resistance layer between approximately $72,900 and $75,800. Momentum indicators show deeply oversold conditions: the RSI is near 27, signaling extreme downside momentum, while the MACD lines are also in oversold territory.
While these readings suggest selling may be stretched, price action remains capped beneath major resistance. If bulls regain control, initial resistance emerges around $65,103. An extended rally could push Bitcoin toward the major resistance zones between $72,874 and $75,796. However, Bitcoin has lost the $62,520 support level, and if the selloff continues, it could drop toward the $59,058 secondary support. A daily candle close below this support would expose the $55,770 deeper downside level.
The broader crypto market is also under pressure, with altcoins like Dogecoin flirting with yearly lows and OKB dropping 2.2% as the sell-off intensifies. A sustained move back above the EMA cluster would be required to shift sentiment away from the current bearish bias.
This article is for informational purposes only and does not constitute financial advice.
