The cryptocurrency market witnessed a significant decline on Tuesday, with numerous on-chain metrics indicating a potential bottom for bitcoin’s (BTC) price.
The overall cryptocurrency market capitalization was just over $2.7 trillion, reflecting nearly a $1 trillion drop since its peak in December 2024, as reported by TradingView. Various indicators imply that the sell-off on Tuesday might have indicated a local bottom.
Andre Dragosch, Head of Research at Bitwise Europe, noted that the Crypto Asset Sentiment Index reached its lowest point since August, aligning with the unwinding of the yen carry trade, which saw bitcoin stabilize around $49,000.
“The Crypto Asset Sentiment Index has just presented a substantial contrarian buy signal for Bitcoin. The prevailing bearish sentiment across flows, on-chain data, and derivatives suggests that downside risks are relatively limited. Given the current prices, the risk-reward profile looks quite attractive,” Dragosch remarked.
On Tuesday, investors suffered $1.8 billion in losses—the largest single-day realized loss since August—due to the yen carry trade unwinding, which contributed to $3.2 billion in realized losses, according to Glassnode data.
Moreover, short-term holders, defined by Glassnode as those who have held bitcoin for less than 155 days, transferred 43,600 BTC (equivalent to $3.9 billion) to exchanges at a loss—marking the highest amount since August 2024.
These metrics play a vital role in identifying potential market bottoms, indicating that bitcoin may be approaching a significant turning point.
