Bitcoin’s recent major sell-off may be coming to an end, suggesting a potential recovery on the horizon, but it’s not yet certain. Bitcoin (BTC) has seen a nearly 5% drop since Friday, dragging down the Fear and Greed Index. Short-term holders have suffered losses, while long-term holders have opted to accumulate more. Despite this, there are signs indicating that the downtrend could be nearing its conclusion.

Selling Pressure Slows, Transfer Volumes Increase

The pressure from long-term Bitcoin holders selling off their assets has been waning. According to crypto analyst Axel Adler Jr., the 90-day moving average of Bitcoin’s token transfer volume change has recently dropped to levels last seen in 2023, which was a period marked by Bitcoin accumulation. This suggests that the heavy selling might be over, paving the way for potential price recovery.

Meanwhile, Bitcoin’s token transfer volume has been mirroring the levels observed at the start of the previous bull run, signaling that the market could be transitioning from a bearish phase to a more favorable one.

Stablecoin Ratio Channel and Liquidity Increase

The stablecoin ratio channel, which signals a buying opportunity during bearish phases, is also showing signs of recovery. Increased stablecoin supply suggests higher liquidity, which typically occurs during market corrections. As liquidity rises, the potential for a market rebound increases, especially if sentiment shifts to a more bullish outlook.

U.S. Investor Sentiment and the Coinbase Premium Index

The Coinbase Premium Index, which tracks the price difference between Coinbase and Binance, has been neutral for the past few months, indicating a lack of strong demand from U.S. investors. Historically, a positive premium signals increased demand from U.S. investors, while a neutral or negative premium reflects fear and caution in the market.

At present, the index is at neutral levels, suggesting that investor sentiment is hesitant but not entirely bearish. The price movement of Bitcoin will likely determine whether this shifts into more bullish territory.

Long-Term Holders’ Behavior and CDD Metrics

Another key metric pointing to a possible end to the sell-off is the BTC coin days destroyed (CDD), which tracks long-term holder activity. When long-term holders move their coins, the CDD increases, signaling a potential trend shift. Over the past three months, the 50-day moving average of CDD has been falling, indicating reduced selling pressure from long-term holders.

This decline in CDD suggests that fewer long-term holders are selling, and as a result, the downward pressure on Bitcoin’s price is easing. While this doesn’t immediately signal a trend reversal, it does suggest that the downtrend is losing momentum.

Caution Advised: Recovery Not Immediate

Although all these indicators point toward the potential end of the downtrend, traders and investors must exercise caution. The market is cyclical, and while a recovery could be on the horizon, it is not guaranteed to happen immediately. Investors should avoid rushing to catch the price bottom and consider that the market could continue to fluctuate before a full recovery takes place.

In conclusion, while Bitcoin may be nearing the end of its major sell-off, the road to recovery could still take time. Investors should remain vigilant and avoid being overly eager to jump back in until clearer bullish signals emerge.