Rising capitulation and deleveraging may signal emerging long-term Bitcoin buying opportunities ahead.
Trader losses intensified during the first week of February. Liquidation volume kept rising as the market repeatedly crushed recovery expectations, driven by consecutive red candles.
However, several analyses point to light at the end of the tunnel, even though a rapid recovery remains unlikely.
CoinGlass reported that total crypto market liquidations reached $2.65 billion over the past 24 hours. Long positions accounted for more than $2.2 billion of that total.
“According to CoinGlass data, in the past 24 hours, 586,053 traders were liquidated, with total liquidations reaching $2.65 billion,” CoinGlass reported.
CoinGlass data also shows that the smallest event in the Top 10 Crypto Liquidation Events of All Time occurred recently on January 31, with $2.56 billion in liquidations. This suggests the ranking could soon be reshuffled.
The market analysis account, The Kobeissi Letter, explained that this move is not a short-term shock. It reflects a structural downturn that has been developing since October last year.
The root causes include weak liquidity, negative sentiment, and cascading liquidation pressure across markets. The account emphasized that this is a recurring cycle: liquidations damage sentiment, and worsening sentiment triggers further liquidations.
Bitcoin’s intraday price swings of up to $10,000 were attributed to sharply reduced market depth. The current Bitcoin market depth is only 30% of its October peak. This condition mirrors the post-FTX collapse environment seen in 2022.
A BeInCrypto report noted that ongoing panic selling has pushed many crypto treasuries toward rising bankruptcy risk. Bitcoin’s drop to $60,000 pushed MicroStrategy’s holdings below cost basis, increasing balance-sheet pressure.
Against this backdrop, veteran technical analyst Peter Brandt offered a forecast based on the “Bitcoin Power Law” model. He suggested that Bitcoin could trade within a “banana peel” range, with potential support near $42,000.
Brandt argued that if Bitcoin enters this zone, similar to previous bear cycles, bullish investors are unlikely to remain below that level for an extended period.
Despite the bleak outlook, not all analysts remain pessimistic.
Glassnode reported that Bitcoin’s capitulation index recorded its second-largest spike in the past two years. This signals a sharp rise in forced selling. The metric tracks supply held at different price levels and measures market stress to identify potential local bottoms.
Such stress events often coincide with rapid de-risking and heightened volatility. Investors rebalance positions during these phases.
Large-scale liquidations also reduce overall market leverage. This process drives a shift away from leveraged speculation toward spot accumulation. “Weak hands” exit, making room for higher-conviction investors.
“Bitcoin deleveraging may create a strong opportunity soon,” economist Daniel Lacalle noted.
These observations suggest a buying opportunity may be forming. They do little, however, to pinpoint exactly when a recovery will begin.
