Bitcoin has experienced a tumultuous start to February 2026, prompting speculation among analysts about whether the market is nearing "full capitulation." Capitulation, in the context of cryptocurrency, refers to a point where investors relinquish hope and sell off their holdings, often at a loss, signaling a potential bottom before a market reversal. Several indicators suggest that Bitcoin might be approaching this critical phase.

One significant sign is the recent drop in Bitcoin's price below key production cost levels for miners. As of February 5, 2026, Bitcoin is trading around $69,280, while the average cost to produce one Bitcoin is approximately $87,000. This discrepancy puts immense pressure on mining operations, particularly those with less efficient infrastructure. When the price of Bitcoin falls below the cost of production, many miners are forced to shut down their operations and sell their Bitcoin holdings to cover expenses, increasing selling pressure and potentially driving the price further down. This phenomenon is known as "miner capitulation" and has historically been a reliable indicator of bear markets.

Another sign pointing towards potential capitulation is the significant spike in realized losses. Data indicates that realized losses have surged to $889 million per day, levels not seen since late 2022. Realized losses reflect the actual pain points in the market, illustrating the extent to which investors are selling their holdings at a loss. Such a high level of capitulation suggests that many of the weaker hands have already exited the market, which often precedes a consolidation phase before a potential recovery.

Finally, the technical indicators reveal oversold conditions and bearish momentum. Bitcoin is trading far below its 20-day, 50-day, and 200-day Exponential Moving Averages (EMAs), signaling a clear downtrend. The daily Relative Strength Index (RSI) has fallen to around 20, indicating deeply oversold conditions. While oversold conditions can lead to sharp snapback rallies, these are typically corrections within a broader downtrend until the 20-day EMA starts to flatten and the price reclaims it. The Moving Average Convergence Divergence (MACD) is also deeply negative, with the MACD line well below the signal line, confirming that sellers remain in control.

While these three signs suggest that Bitcoin is nearing full capitulation, it is important to note that the market remains highly volatile and unpredictable. A sustained period of ETF inflows and a recovery in basis APR could signal a reversal. Conversely, further negative news or unexpected regulatory actions could exacerbate the downward pressure. Investors should therefore exercise caution and conduct thorough research before making any investment decisions.