Signs of Stabilization: What On-Chain Data Reveals About Bitcoin

A shift in Bitcoin market dynamics may be closer than it appears. Recent on-chain data points to a significant change in investor behavior patterns, signaling a possible recovery in sentiment that has dominated the past few weeks.

The History of Panic and the Turnaround

Between mid-November and the end of the month, the scenario was chaotic. From November 13 to 25, there was a surge in the number of Bitcoin addresses liquidating their positions completely. This phenomenon was no coincidence: it aligned with a sharp drop in BTC price, characteristic of typical fear-driven selling behavior.

However, December brought a turnaround. As Bitcoin’s price began to stabilize and tested lower supports between December 1 and 18, a completely different pattern emerged from the on-chain metrics.

The Silent Indicator of Recovery

What makes this transition relevant is the change in the number of addresses in liquidation. The significant reduction in this indicator suggests that panic selling is decreasing. In other words, investors have stopped hitting the panic button as frequently.

This normalization in liquidation activities is particularly important because it acts as a thermometer of the market’s true sentiment. When fewer addresses liquidate their positions during price drops, it indicates a support base formed by investors willing to hold their positions — exactly the opposite of what we saw in November.

What This Means Going Forward

The stabilization shown by on-chain data does not guarantee an immediate price recovery, but it signals a psychological shift among market participants. Bitcoin is no longer in a psychological free fall; there is an alignment between long-term investor resistance and the price stabilization that is beginning to form.

This reduction in liquidations is, therefore, a sign that the market is finding a new floor of confidence — an essential ingredient for any sustainable recovery.