The Bitcoin market entered a capitulation phase in early February, driven by global risk-off sentiment, a surge in U.S. Treasury yields, and lingering inflation concerns. Liquidity pressure intensified, triggering capital outflows from crypto assets across both institutional investors and long-term holders.
The current market structure remains fragile and is dominated by short-term holder (STH) supply. STH supply has reached 5.69 million BTC, reflecting a large number of investors who entered at elevated price levels and are now holding unrealized losses. In contrast, long-term holder (LTH) supply has remained relatively stagnant at around 14.28 million BTC, indicating a lack of accumulation interest at current price levels.
Selling pressure has been further reinforced by a sharp outflow from spot Bitcoin ETFs, totaling USD 509.7 million in a single day, led by BlackRock’s IBIT. On the macro front, the U.S. 10-year Treasury yield rising to 4.26% has drawn global liquidity back into the U.S. dollar, weighing on risk assets. Despite on-chain indicators such as the MVRV Z-Score at 0.77 suggesting Bitcoin is historically undervalued, market sentiment remains in Extreme Fear (15), keeping the risk of further downside firmly in place.
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