As selling pressure deepens, analysts note that technical indicators suggest the market has entered a “capitulation” phase.
Two key indices, in particular, suggest the current decline may not be complete yet, and downside risks persist.
Crypto analyst Axel Adler Jr. highlighted the “Bitcoin Futures Fund Flow Index” data. According to Adler, this index analyzes the structural direction of the market by combining price dynamics with fund flows (trading volume and open position changes) in derivative markets.
According to Adler's data, since last Friday, the fund flow index has fallen from around 50 to the critical threshold of 7.1%. This level marks both the lower end of the index scale and the most extreme value in the last month. While price movements since January 28th confirm the downtrend, the index falling below the 45% threshold as of January 30th officially signifies crossing the bear market boundary, according to the model definition.
Historically, a figure as low as 7.1% usually indicates that the market has entered the "capitulation zone." According to the analyst, a sustained recovery requires the index to rise above the 45% level again and prices to stabilize. Otherwise, any increases will be considered technically corrective movements within a bear market.
On the other hand, a second indicator, the “Localized Pressure Index,” measures the overall pressure on the market by combining volatility, funding rates, and leverage levels. During the sell-off on Friday evening, January 31st, when prices fell below $78,000, the index rose to 92.5. Throughout the weekend, the indicator remained in a “tail risk alert” state, indicating a simultaneous downtrend, increased volatility, and one-way fund flows. The current level of 73 still points to the “high pressure” zone.
Past data shows that periods when the Localized Pressure Index rose above 90 often coincided with local lows. However, if the index climbs back above 80 under a new sell-off, this could signal a continuation of the waterfall-type decline.
When the two indicators are considered together, a clear picture emerges: the fund flow index is at extremely low levels, while the pressure index is near its peak. According to analysts, this combination points to the classic "capitulation" phase of the market. During this phase, selling pressure reaches its maximum while the market attempts to absorb the liquidity shock. However, a sustained recovery requires a renewed upward breakout of technical thresholds.
