Swyftx Squawk 🦜 How Much Pain Is Enough?

There’s one thing crypto never fails to deliver, and that’s strapping us into a nonstop emotional rollercoaster.  

In recent times, Fear and Greed measurements, like those found on CMC, are sitting at a reading of at or below 15. To put that in perspective, the lowest figure we’ve seen all year was 15 on the 11^th of March.  

This sell off has hit everyone hard. And as we touched on last week, the market has been expecting rate cuts to continue into the new year, but are now suddenly second-guessing thanks to a hawkish US Fed.  

We’re at a point where the average ETF holder is underwater on their Bitcoin holdings according to this article. This is a great example of why the market is so fearful – many new investors, following the euphoria of BTC all-time highs, are now nursing paper losses. 

Naturally, the sentiment I’m hearing is along the lines of “when is it going to be over?”. 

This questions is probably rhetorical...but why not try work it out anyway? Let’s dig in.  

A technical look at Bitcoin 

One way we can assess the severity of this sell off is by measuring the total percentage retracement from Bitcoin’s highs.  

Looking back at major dips in early 2024 (-33%) and 2025 (-31%), a pattern starts to appear. The market has historically pulled back approx. 30%, before eventually pushing back higher. From its local high, Bitcoin has currently fallen just shy of this 30% figure.  

Interestingly, a -32% move would mean Bitcoin is trading at around $85k USD. This is also the next key level traders and investors looking at Fibonacci sequencing might be interested in. Fibonacci sequences are popular in trading, adapted from the mathematical Fibonacci numbers which are ratios that measure growth patterns in nature, humans and in this case markets. These ratios are often used by technical traders as ranges to step in and provide support.

The market might be ready to react once price hits the 0.786 ratio at $85,253. 

So, there is sound basis from a technically blended approach to think that the end may be near. Though we never know what is going to happen, we have ourselves a window of price to pay attention to and see how the market reacts to it.  

Next, let’s look at some on-chain data to see what we can learn. 

Chart of the week: Short-term holder behaviour in this dip 

On-chain data can provide a unique perspective to market dynamics that’s only possible in crypto. By examining the behaviour of Bitcoin holders on the blockchain, we can get a clearer understanding on trends and behaviour patterns.  

Short-term holders are defined as those who have held Bitcoin on-chain for less than 155 days. The idea being that short term buys may be the first to sell, as Bitcoin falls to (or below) their entry price. 

The chart below shows Bitcoin’s price in black, and beneath it in red is the rate of change in short-term holders. When the metric in red trends downward, it may indicate that short-term holders are in pain and capitulating.  

What’s interesting in this data is that we simply may be seeing another very methodical resetting of the market like we saw in early 2024 and 2025. Those were the previous ~-30% dips I was talking about above. This is represented by the previous two times the short-term holders z-score metric hit -1. 

Putting this all together, the data is compelling enough to justify avidly watching how the market behaves in the coming days.  

A reaction to these levels could suggest the market is seeing value in Bitcoin at these prices, which could lead to a jump higher. And the inverse of that is true as well. If we fail to see demand at key price levels, it could suggest the market isn’t as healthy as we might like to think. 

See you all again next week.  

 Flows 

The buy-to-sell ratio for unique Swyftx orders is nominally >$20,000 AUD (rolling data over the last 7 days, captured at 09:00 am AEST).