Crypto market enters 'extreme fear' territory as Bitcoin resumes distribution cycle
BTC falls beneath $70,000 threshold amid mounting selling pressure, elevated exchange deposits and extreme fear readings indicating fresh distribution activity.
During Tuesday's European trading hours, Bitcoin (BTC) witnessed sellers gaining the upper hand as the BTC/USD trading pair fell beneath the $70,000 threshold for the first occasion since April.
Market analysts indicated that Bitcoin has commenced another distribution cycle driven by intense selling pressure and loss-taking behavior among investors.
Key takeaways:
- Bitcoin experiences fresh distribution activity as recent buyers dispose of holdings at losses while exchange deposits maintain upward trajectory.
- Digital asset market sentiment returned to "extreme fear" territory, coinciding with spot Bitcoin ETFs recording 11 consecutive days of capital outflows.
- Large holder transactions climbed to peak levels not observed since April, indicating potential accumulation activity despite widespread market deterioration.
Bitcoin holders are capitulating
The Short-Term Holder SOPR (STH-SOPR) indicator, which measures whether recent holders are disposing of their coins at gains or losses, fell beneath 1 as diminishing prospects for a US-Iran ceasefire drove Bitcoin price under $70,000.
Presently sitting at 0.98, the metric demonstrates renewed loss-taking among short-term participants, indicating that the predominant sellers are newer market entrants responding to uncertainty instead of long-term systematic distribution.
The visualization above reveals a comparable situation in early February following US President Donald Trump's announcement of 15% blanket tariffs notwithstanding the Supreme Court's ruling declaring them illegal. Market uncertainty escalated as the confrontation between Federal law and presidential power drove BTC price down to $65,000.
Identical patterns emerge among the six-12 month holder category that has "activated potential selling positions," according to CryptoQuant analyst Rei Researcher in a QuickTake note published on Tuesday.
The quantity of BTC transferred to exchanges by the six-12month holder segment (yellow columns) has risen steadily since May, attaining volumes last witnessed in October 2025 when Bitcoin achieved its all-time high exceeding $126,000. BTC price has remained in a prolonged downtrend since that peak.
Substantial supply pressure from this cohort, manifesting prominently at present, represents a "huge barrier to the recovery momentum," according to the analyst, who further stated:
"This exchange inflow volume needs to be well absorbed; otherwise, $BTC will face deeper correction waves."
Furthermore, Bitcoin's realized profit/loss ratio, an indicator measuring the equilibrium between crystallized profits and losses for coins transacted onchain, has declined to -0.87 from -0.4 last week, signifying a 125% increase, based on data from Glassnode.
"This reflects a period of heightened selling pressure where market participants are increasingly willing to divest their holdings at a loss," the onchain data provider stated in its most recent Market Pulse report, further noting:
"Bitcoin is in a distribution phase with deteriorating breadth."
Crypto sentiment drops to "extreme fear" again
The Crypto Fear and Greed Index reached 23 on Tuesday, reverting to the "extreme fear" territory that dominated the market throughout early February and late April.
The index assesses market sentiment through volatility, momentum, trading volume, and social signals. A measurement beneath 25 indicates "extreme fear" or risk aversion, whereas 26–49 represents cautious positioning or "fear," with elevated readings suggesting improving investor confidence or "greed."
The index's descent below 25 accompanies the most recent downturn in the crypto market, which has witnessed the global crypto market capitalization decline 7% during the past week, whereas Bitcoin fell 9.3% across the identical timeframe.
Spot Bitcoin exchange-traded funds (ETFs) have additionally documented a consecutive series of outflows spanning the past 11 trading days, per Farside Investors data. The most significant outflow throughout the 11 days totaled $733.4 million on May 27.
In the meantime, additional analysts identified alternative indicators of optimism for the Bitcoin bulls.
As Bitcoin descended below $70,000, the "network saw most transactions valued at $100,000 or more since April 22," according to onchain analytics platform Santiment in a Tuesday X post, which also noted:
"This is historically a strong sign of whale accumulation."
