The cryptocurrency market faced a sharp downturn on Tuesday, with many on-chain metrics suggesting that bitcoin (BTC) may have reached a bottom. The total crypto market capitalization fell to just above $2.7 trillion, reflecting a nearly $1 trillion decline since its peak in December 2024, according to TradingView data. Andre Dragosch, Head of Research at Bitwise Europe, pointed out that the Crypto Asset Sentiment Index hit its lowest level since August, aligning with the unwinding of the yen carry trade, which saw bitcoin bottom out around $49,000. “The Crypto Asset Sentiment Index just flashed a massive contrarian buy signal for Bitcoin. Widespread bearishness across flows, on-chain data, and derivatives suggests that downside risks are fairly limited. At these prices, the risk-reward outlook appears quite favorable,” Dragosch stated. On Tuesday, investors incurred $1.8 billion in losses—the largest single-day realized loss since August—amid the yen carry trade unwind, which resulted in $3.2 billion in realized losses, per Glassnode data. Additionally, short-term holders, defined as those holding bitcoin for less than 155 days, transferred 43,600 BTC ($3.9 billion) to exchanges at a loss, marking the highest level since August 2024. These indicators are critical in identifying potential market bottoms, hinting that bitcoin may be approaching a pivotal turning point. — news from CoinDesk
