Capitulation of crypto: when everyone sells and the rise begins

Capitulation is when the majority of investors surrender and start to mass liquidate their positions. It sounds scary, but the paradox is that this often becomes the best entry point.

How does capitulation look like

Imagine: your crypto has dropped by 30% overnight. Everyone has the same thought — urgently sell to save something. The wave of selling drives the price even lower. At some point, sellers simply have nothing left to dump — this is called the price bottom.

Capitulation signals:

• Surging trading volumes
• Sharp decline of the exchange rate
• Manic Volatility
• The exit of large players (whales are starting to accumulate, not to sell)
• Negative news background

For example: the collapse of FTX exhibited almost all of these signs simultaneously.

Why Capitulation is a Benefit for Long-Term Investors

Experienced traders know: capitulation = potential bottom. They do not panic, but absorb the selling pressure, creating a base for the next bullish trend.

Data from Glassnode shows an interesting pattern: during bearish trends, the number of BTC that have been on addresses for more than six months (, so-called “old coins” ), is increasing. This means that speculators are leaving, while serious investors are accumulating.

As a result, capitulation redistributes crypto capital from impatient newcomers to long-term hodlers.

Trap: how not to confuse the bottom with the collapse

The problem is that it is impossible to determine the exact bottom. BTC fell for two consecutive years in 2014-2016. Traders usually rely on historical lows and a plethora of indicators, but even that does not guarantee accuracy.

Bitcoin and Ethereum have experienced a lot of capitulations over the past eight years — each time after them came a surge (remember March 2020 ). The pattern is clear, but predicting it in real time is an art, not a science.