{{articledata.title}}

- Bitcoin shows signs of ending its capitulation phase, and analysts see a high probability of a reversal

- Historical patterns indicate strong upside potential despite bearish sentiment and elevated volatility

- Valuation metrics suggest Bitcoin is undervalued while traders warn against using leverage too aggressively

Bitcoin's (CRYPTO: $BTC ) latest decline has pushed the market into one of its deepest capitulation phases since late 2022, yet emerging technical signals indicate that the slide may be nearing completion. Prices recently recovered to about $88,928, marking a modest 1.55% rise over the past day. Analysts argue that structural indicators, rather than sentiment-driven signals, now provide a clearer picture of what is to come.

Capitulation Model Suggests Market Bottom May Be Forming

In a post on X, Market analyst Astronomer pointed to a high-probability reversal setup driven by weekly capitulation patterns that have historically preceded strong rebounds. The framework studies three consecutive high-volume red candles on weekly charts. Each instance reflects intense selling activity that often exhausts downward momentum.

The model has identified 11 comparable events across Bitcoin's history. Two produced short-lived bounces of around 35 percent before broader downtrends resumed. Eight triggered sustained recoveries that later built toward new highs. Only one case broke lower, making the scenario statistically rare. Therefore, the analyst assigns a 91% probability that Bitcoin can avoid closing below its recent weekly lows.

Based on this structure, projections indicate a potential move toward $118,000 from current levels, with a 99% likelihood of at least reaching $112,000. The broader trend continuation carries an estimated 75% probability.

Bearish Sentiment May Mask Opportunity

Investor sentiment has soured, fueled by prominent warnings about a potential market reset. Yet Astronomer argues that such caution often peaks when prices sit at or near significant inflection points. Traders waiting for stronger confirmation may later face higher entry levels if the market turns.

Crowd positioning strengthens the case for a contrarian stance. Historically, fear-driven selling near weekly capitulation lows has delivered weaker outcomes. Markets often reward participants willing to act when the majority hesitates, provided the technical data supports the move.

Moreover, valuation indicators are shifting into favorable territory. Bitcoin's value-to-transaction ratio has fallen to about -1.6, a reading associated with undervaluation. The metric compares market capitalization with network activity, and negative readings have often preceded short-term recoveries. It signals that Bitcoin's price may have disconnected from transactional fundamentals in a way that benefits buyers.

Despite rising confidence in a potential reversal, elevated volatility continues to influence near-term trading conditions. Crypto trader Darkfost warns that leverage use could become dangerous as sharp counter-moves remain possible. Sudden swings have already liquidated overextended positions across major exchanges.