Bitcoin Enters ‘Excess Loss-Realization’ Phase As RSI Signals Potential Bottom

Bitcoin prices retreated sharply on Tuesday, falling 4% within 24 hours to an intraday low of $62,700, as renewed selling pressure from short-term holders intensified market volatility. Analysts observed that the cryptocurrency has transitioned into what they describe as an “excess loss-realization” phase, characterised by elevated levels of capitulation among recent buyers reacting to macroeconomic uncertainty. The decline followed the announcement of a new 15% global tariff by US President Donald Trump, which triggered heightened risk aversion across digital asset markets and accelerated short-term liquidation activity. Short-Term Holders Drive Selling Pressure On-chain data indicates that the Short-Term Holder SOPR metric has fallen below 1, currently reading 0.95, signalling that many recent entrants are realising losses rather than profits. CryptoQuant analyst XWIN Research Japan explained in a Quicktake post: “The primary sellers are short-term holders reacting to uncertainty, rather than long-term investors distributing structurally.” Although the seven-day estimated moving average of short-term holder net realised losses has cooled to $500 million per day from a peak of $1.24 billion earlier this month, broader sentiment remains fragile. Glassnode noted: “While the intensity has cooled, the broader regime still signals a market under pressure, with participants in the base formation phase continuing to capitulate.” Further reinforcing this shift, the 90-day simple moving average of Bitcoin’s realised profit/loss ratio has dropped below 1, confirming what analysts describe as a full transition into an excess loss-realization regime. Oversold RSI Points To Possible Reversal Despite ongoing weakness, technical indicators suggest that Bitcoin may be approaching historically significant oversold territory that has previously preceded major recoveries. The weekly relative strength index has fallen to 25.71, marking its lowest recorded level and surpassing extremes seen during the aftermath of the 3AC and Terra-Luna collapse. Crypto analyst Nic Puckrin observed: “More downside is likely, but a bottom could be coming soon.” Historically, comparable RSI readings have coincided with periods of acute short-term weakness followed by substantial medium- to long-term rebounds, suggesting that capitulation phases may lay the groundwork for renewed accumulation. Additional sentiment gauges, including historically low fear and greed index readings and a decline in bullish forecasts for new all-time highs, indicate pervasive caution that some market participants interpret as a contrarian signal. While volatility is likely to persist in the near term, the combination of extreme technical oversold conditions and diminishing realised losses suggests that Bitcoin may be entering a foundational phase preceding its next structural trend.