Bitcoin Slide Leaves Over 70% of Active capital in Losses as Sentiment Collapses

Core Insights - Bitcoin has experienced a significant decline, dropping nearly 35% from its October peak of approximately $126,000 to a seven-month low, resulting in substantial unrealized losses for investors [1][2] Market Conditions - Over 70% of US dollars invested in Bitcoin are currently at a loss, with 71.2% of the network's realized capitalization having a cost basis of at least $86,500, indicating a high entry price for active investors [2] - The recent price drop has left many short-term holders trapped in positions that are no longer profitable, leading to a collapse in their Net Unrealized Profit and Loss metrics [3] Market Sentiment - Bitcoin's market sentiment has reached a two-year low, with the Relative Unrealized Loss indicator spiking to 8.5%, suggesting a significant market reset rather than a typical volatility correction [4] - Social media sentiment among retail traders has deteriorated, with panic-selling observed at levels not seen in two years, indicating severe psychological damage to the retail sector [5][6] Potential Contrarian Signals - Historically, extreme bearish sentiment can act as a contrarian signal, suggesting that the market may be clearing out weak hands in preparation for a potential local bottom [6]