Analyst Predicts Bitcoin's Tuesday Crash Marked its Low Point

On Tuesday, the cryptocurrency market underwent a significant decline, with various on-chain metrics suggesting that the price of bitcoin (BTC) may have hit a low point.

The total market capitalization of all cryptocurrencies hovered slightly above $2.7 trillion, representing a decrease of nearly $1 trillion since its peak in December 2024, as per data from TradingView. Several indicators imply that Tuesday's sell-off might have indicated a local bottom.

Andre Dragosch, the Head of Research at Bitwise Europe, pointed out that the Crypto Asset Sentiment Index reached its lowest level since August, coinciding with the unwinding of the yen carry trade, which saw bitcoin bottom out around $49,000.

"The Crypto Asset Sentiment Index has just given a major contrarian buy signal for Bitcoin. The widespread bearishness in flows, on-chain data, and derivatives suggests that the downside risks are relatively limited. Given these prices, the risk-reward outlook looks quite promising," Dragosch observed.

On Tuesday, investors faced a loss of $1.8 billion - the most significant single-day realized loss since August - when the yen carry trade unwind resulted in $3.2 billion in realized losses, according to data from Glassnode.

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Furthermore, short-term holders, defined by Glassnode as investors who have held bitcoin for less than 155 days, transferred 43,600 BTC ($3.9 billion) to exchanges at a loss - the highest level since August 2024.

These metrics are essential in detecting potential market bottoms, indicating that bitcoin could be approaching a significant turning point.

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