Bitcoin Sees Massive "Capitulation" Event as Prices Dip to $60,000
Bitcoin's recent price dip to $60,000 on February 6 triggered a significant surge in exchange inflows, an event that prominent on-chain analyst Darkfost has labeled a "capitulation." This market movement was primarily driven by short-term holders and smaller retail investors, often referred to as "shrimp" wallets, signaling heightened investor anxiety.
On-Chain Data Flags Widespread Selling
The data paints a clear picture of panic selling. Darkfost noted that Bitcoin revisited price levels not seen since October 2024, representing a substantial 50% drawdown from its previous all-time high. This rapid correction fueled a "fear-driven dynamic," leading investors to quickly move their coins onto exchanges. Notably, Binance alone saw over 100,000 BTC flow in from short-term holders (STHs) on February 6, surpassing the activity observed during the April 2025 correction. Across various exchanges, a staggering 241,000 BTC was transferred between February 4 and 6, underscoring intense selling pressure that amplified existing market volatility.
Retail Investors Lead the Exodus
The "capitulation" narrative gains further traction from the behavior of smaller investors. Wallets holding less than 1 BTC, categorized as "shrimps," dramatically increased their deposits to Binance, exceeding 1,000 BTC in a single day on February 5. This figure stands in stark contrast to their typical monthly average of around 365 BTC. While a similar surge from "shrimps" was observed in July 2025, Darkfost emphasizes the vastly different market conditions then, when Bitcoin was pushing towards new highs. He further linked this trend to cost-basis dynamics, highlighting that STHs in the 6-12 and 12-18 month cohorts were underwater, with cost bases of $103,188 and $85,849, respectively, creating immense pressure to sell.
Market Outlook: An "Exhaustion Flush"
Darkfost characterized the event as an "exhaustion flush," implying that the market would need considerable time to absorb the selling pressure. Although Bitcoin briefly dipped below $60,000, it swiftly rebounded, trading around $71,000 before settling at $69,525 at press time. This stabilization, according to Darkfost, aligns with retail flows gradually returning to their averages. The crucial question remains whether this marks a definitive low or merely a temporary respite in an inherently volatile market environment.
