Bitcoin short term holders are panic selling at a loss but was this capitulation or just a leverage reset?

Bitcoin's recent sharp decline below $65,000, its worst weekly performance since late 2022, was driven by a broad risk-off sentiment in equities, leading to a necessary reset of leveraged positions. The selloff featured three key ingredients: weakness in high-beta risk assets like Nasdaq, significant liquidations exceeding $3.3 billion, and persistent net outflows from Bitcoin ETFs. On-chain data supports the severity, showing the Short-Term Holder SOPR dropped to 0.93, indicating recent buyers were selling at a loss, and the share of profitable supply fell significantly. However, the article questions whether this was true capitulation or merely a leverage flush. Durable capitulation typically requires a sharp drop in liquidation volumes post-spike and stabilization in open interest and funding rates. While the pain signals are present, the market needs to show it can attract marginal demand again, as ongoing negative ETF flows present a headwind that distinguishes this event from cleaner capitulation cycles. The next phase depends on sustained lower liquidation intensity, rising SOPR, and stabilization in equity markets.

(Source：CryptoSlate)