After reaching historic highs, the Bitcoin market experienced an 18% correction in February, raising questions about the potential extent of the downturn. On-chain analysis provides key insights into the current market dynamics.
According to Glassnode, Bitcoin has entered a phase of “intensive distribution.” Investors who purchased near the all-time highs ($108,000–$109,000) are now closing positions—partly to secure profits, and partly to minimize losses amid the ongoing correction.“Since early January, Bitcoin has entered a phase of intensive distribution, and the accumulation trend indicator confirms sustained selling pressure,” the Glassnode report states.
Selling is driven by a combination of fear and uncertainty. The STH-SOPR indicator has dropped below the equilibrium level of 1, signaling loss realization among short-term holders.“The intensity of the current sell-off resembles previous capitulation events, particularly in August 2024,” notes the Glassnode analysis.
Unlike previous months, when declines to the $95,000–$98,000 range triggered accumulation demand, a shift in sentiment has been observed since late February:
"The lack of a significant demand response to price drops indicates that market sentiment has shifted toward risk aversion and capital preservation," — Glassnode.
STH Cost Basis Analysis Indicates a Key Support Zone "The lower bound of the model ranges from $71,300 to $91,900. This zone overlaps with the liquidity gap between $70,000 and $88,000, suggesting a high probability of forming a temporary bottom in this area," — Glassnode forecast.
Bitcoin is currently at a critical point in its market cycle. Selling pressure from short-term holders (STH), combined with limited accumulation demand, indicates the potential for further correction. The $70,000 level remains a key technical support to watch.
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