Panic selling by short-term holders, extreme fear, and oversold RSI suggested that BTC could be nearing the final phase of capitulation. Sellers resumed their activity on Thursday as the BTC price dropped below $69,000, marking the lowest point since November 6, 2024. Analysts believe Bitcoin is showing signs of 'full capitulation' and potentially forming a bottom, influenced mainly by extreme market fear, panic selling from short-term holders, and the relative strength index (RSI).

Short-term Bitcoin holders sold nearly 60,000 BTC in just 24 hours. This significant sell-off, worth about $4.2 billion at current rates, was driven by investors who have held their assets for less than 155 days. The influx of BTC to exchanges contributed to mounting selling pressure. One analyst noted that the correction is so severe that no BTC in profit is being moved by long-term holders (LTHs), underscoring the depth of this capitulation phase.

The Crypto Fear & Greed index has also plunged to an 'extreme fear' level, indicating potential market bottoms. Historically, such extreme fear levels have often preceded a rebound in prices. In fact, during previous capitulation events, short-term weakness was common, but almost always followed by recovery.

In addition to selling pressure, the realized losses for Bitcoin have surged, with the 7-day SMA of realized losses exceeding $1.26 billion per day. This reflects a pronounced increase in market fear. The capitulation metric has experienced its second-largest spike in two years, historically correlating with elevated volatility as market participants adjust their positions.

Interestingly, Bitcoin's RSI is currently displaying oversold conditions across multiple time frames. The RSI is now at 18 on the 12-hour chart, 20 on the daily, and 23 on the four-hour chart. These figures indicate that Bitcoin is the 'most oversold' it has been since the 2022 bear market.

Data suggests that the weekly RSI is at 29, the lowest since the FTX crash, reflecting widespread panic selling among investors. Analysts point out that historically, this is where fear peaks and buying opportunities begin. The oversold levels are reminiscent of the last major capitulation phase around $16K in 2022.

While the current market sentiment leans heavily bearish, experts argue that now could be the time for accumulation. Many believe that the small trader crowd's disbelief in cryptocurrency could set the stage for a short-term relief rally. As Bitcoin navigates through this turbulent period, the market's response to these signs of capitulation will be closely monitored by both seasoned investors and newcomers alike.

In conclusion, the combination of panic selling, extreme fear levels, and oversold RSI indicates that Bitcoin may be approaching a critical juncture. While the current environment is fraught with uncertainty, history has shown that periods of extreme fear often lay the groundwork for significant price rebounds. Investors are advised to remain vigilant and consider the data before making decisions in this volatile market landscape.