Understanding Bitcoin's recent price volatility requires moving beyond the simplistic view of a single market bottom. Instead, a more insightful analysis reveals that the recent major declines, particularly in late 2025 and early 2026, were a complex, multi-stage capitulation process, characterized by different investor cohorts surrendering at distinct moments, leaving unique footprints on the blockchain.
Two Acts of Capitulation
The market experienced two significant capitulation events, each exceeding $2 billion per day in realized losses. The first "act" unfolded in November 2025, when Bitcoin fell to approximately $80,000. This phase was predominantly driven by the "class of 2025," investors who had endured a year of sideways trading and market stagnation. Their capitulation was born out of exhaustion—a "time pain" that eventually translated into "price pain," as they chose to exit rather than remain stuck in a frustrating market. This suggests a slow, grinding bear market, where conviction gradually eroded over an extended period. The second, more dramatic "act" arrived in February 2026, pushing Bitcoin down to around $60,000. This flush had a different emotional signature, breaking the confidence of a new set of market participants. Data indicates that sellers in February were a mix: the remaining, deeply regretful "class of 2025" holders who missed earlier exit points, and significantly, the "class of 2026" – newer buyers who had optimistically bought the $80,000-$98,000 range, believing they were catching the bottom. Their capitulation was a brutal realization that their "dip buy" was merely the first of many. This combined selling pressure, from both exhausted long-term holders and freshly broken dip buyers, led to the largest realized loss event in history in absolute dollar terms, accompanied by an unprecedented surge in trading volume across all market venues.
Redefining Market Bottoms
This "two capitulations" framework underscores that market bottoms are not instantaneous events marked by a single low price, but rather dynamic processes that play out around fundamental cost basis anchors. Key reference levels, such as the network's average cost basis (realized price, around $55,000) and the true market mean (approximately $79,400), define a band where bottom formation occurs. The February $60,000 wick, for instance, aligned closely with the 200-week moving average, a historically significant level. By understanding who sold and why they sold in these distinct phases, rather than focusing solely on the "when," we gain a clearer "seller map" that reveals where the weak hands were cleared out. This crucial insight helps to navigate the subsequent market digestion phase and the slower, more earned rebuilding of risk appetite.
