- Recent analysis suggests that BTC has the potential for a market rally following recent capitulation driven by panic sellers.
- Buying activity is gradually increasing, supporting a rebound narrative.
Over the past week, Bitcoin [BTC] has been bearish, recording a significant 10.77% loss—its largest decline in the past month.
In the last 24 hours, the bearish trend has continued, with a 2.38% drop, marking the first major market capitulation since August 2024.
However, historical data presents an opportunity for a major price rebound, suggesting that a new high could be on the horizon as soon as buying activity resumes.
Short-term holders: Key determinants of a rally
Short-term holders (STH) play a crucial role in determining market movements based on their reactions.
In market conditions like this, analyzing the STH-SOPR (Spent Output Profit Ratio)—which tracks whether this cohort is realizing profits or selling—alongside Bollinger Bands, a technical indicator for identifying overbought and oversold regions, provides key insights into potential price action.
Source: Cryptoquant
Historically, when the STH-SOPR drops below the lower Bollinger Band—as indicated by the red circle to the left—BTC tends to experience a strong rally, recovering losses quickly.
These gains typically range between 8% and 42%. At the time of writing, BTC is currently in this phase. If history repeats, the asset could see a significant bounce to the upside, posting further gains.
Opportunity ahead despite major capitulation
Bitcoin just recorded its largest market capitulation of 2025 and the first since August 2024, largely driven by new investors.
This resulted in 79,000 BTC being sold in the spot market, along with an additional $1.7 billion in liquidated derivative contracts, pushing BTC below $90,000 for the first time in three months.
A closer look at the chart shows that after August’s major capitulation (red cloud bottoming out on the left), Bitcoin’s price (black line) began rising steadily.
With a similar event in the past 24 hours, BTC now has a strong chance of a sharp upside move.
Source: Cryptoquant
However, the rally depends on whether traders are buying. AMBCrypto found signs of growing bullish sentiment in the market.
Buying activity is building
Bullish sentiment is gradually increasing. In the past four hours, there has been a massive short liquidation of $11.59 million, compared to just $663,900 in long liquidations.
When short liquidations significantly outpace long liquidations, it indicates the market is moving against sellers. In this case, with 17.4 times more short liquidations than long, strong buying activity is evident.
Funding rate data, another key market indicator, confirms that long traders dominate. A positive funding rate reading of 0.0039% supports this trend.
If buying activity continues to increase, BTC could see a strong price surge in the coming weeks.
