Bitcoin outflow from weak hands to strong hands should accelerate recovery

Source: PortaldoBitcoin Original Title: Exit of Bitcoin from weak hands to strong hands should accelerate recovery Original Link: https://portaldobitcoin.uol.com.br/saida-de-bitcoin-das-maos-fracas-para-as-fortes-deve-acelerar-recuperacao/ A strong reversal in the fortunes of recent Bitcoin investors may be setting the stage for the cryptocurrency’s next rally.

Short-term Bitcoin holders, defined as those who keep coins for one to three months, saw their aggregate profit/loss swing from a +25% gain in mid-May 2025 to a -25% loss in December.

This drastic change indicates a wave of capitulation underway, with recent buyers being “flushed out” of their positions — a transfer of wealth from weak hands to strong hands.

“During this cycle, these phases have often been associated with bottom formation,” noted CryptoQuant analyst DarkFrost. He added that once a large portion has capitulated, “that’s generally when the opportunity to accumulate becomes attractive.”

“Bitcoin faced a strong rejection at $93,000 last week, but as the price tries to break through that level again today, we’re seeing large clusters of short liquidations forming,” Glassnode observed in an analysis. The company highlighted that the forced buying resulting from these liquidations can “fuel the rally, as forced buyers amplify momentum.”

The market is now approaching a price level that could trigger a recovery, with Bitcoin trading at $93,330 after a 6.5% rise in the past 24 hours, according to CoinGecko data.

A break above $93,321 would liquidate approximately $570 million in short positions accumulated over the past week, according to CoinGlass data, reinforcing Glassnode’s short squeeze thesis.

When the price moves against them, short sellers are forced to buy back their positions to limit losses, creating additional buying pressure that can accelerate the ongoing recovery.

Ongoing Recovery

Options data supporting this trend shows that the market is positioning itself cautiously for a possible recovery.

The 7-day 25-delta options skew improved from -10% to -4% between November 30 and December 3, according to Deribit data, indicating a notable reduction in demand for (put) options or bearish bets. The 30-day skew showed a similar, though more modest, increase.

An increase in this metric signals declining demand for downside protection. “This phenomenon signals a recovery,” said Adam Chu, chief researcher at options analytics firm GreeksLive.

“With the Federal Reserve ending quantitative tightening and increasing the chances of rate cuts, there is potential for liquidity to return to risk assets — and cryptocurrencies in particular,” Chu noted.

The convergence of these factors paints a clear picture: the painful liquidation of short-term short positions has removed a source of selling pressure.

A sustained break above the $93,000 level now has the potential to trigger a reflexive rally, as trapped short positions are forced to close, accelerating Bitcoin’s recovery from its recent lows.