Bitcoin (BTC) Approaches Local Bottom Amid Institutional Interest and Market Stabilization

Bitcoin has experienced a notable recovery, rising over 15% from its recent lows to $93,116, following a sharp 35.9% correction from its all-time high, according to Bitfinex Alpha. Despite this rebound, selling pressure persists as BTC dropped 4.1% shortly after the weekly open.

Market Stabilization Indicators

Bitfinex suggests that the market is nearing a local bottom, supported by extreme deleveraging, short-term holder capitulation, and signs of seller exhaustion. On-chain metrics, such as the Adjusted Spent Output Profit Ratio, have fallen below 1 for the third time since early 2024, aligning with previous cyclical lows.

Entity-Adjusted Realised Losses have surged to $403.4 million per day, surpassing previous major lows, indicating that capitulation may be nearing its end. Additionally, BTC futures open interest has declined to $59.17 billion, suggesting a reduction in leverage.

Institutional Interest and Economic Context

Recent US economic data shows a divergence between consumer activity and business investment. While retail sales have slowed, business investment remains strong, supported by increased spending on AI and automation. This economic backdrop provides a robust growth outlook, with the Atlanta Fed estimating 3.9% annualized GDP growth for Q3.

Institutional interest in Bitcoin is gaining momentum. BlackRock's latest SEC filing revealed a 14% increase in IBIT holdings, while ARK Invest continues to expand its crypto investments. Texas has also become the first US state to invest in Bitcoin, allocating $5 million to IBIT as part of a state-level reserve program.

These developments highlight a shift towards deeper institutional integration of Bitcoin, with entities using Bitcoin ETFs for diversification. As the market transitions into a more stable consolidation phase, there is potential for a sustained recovery base to form.

For more detailed insights, visit the Bitfinex Alpha.