Can capitalization affect the validity of a Bitcoin address?

Yes, capitalization can affect the validity of a Bitcoin address depending on address type at hand.

For legacy Bitcoin addresses (starting with a 1 or 3), capitalization is significant and must be entered correctly to ensure the transaction is processed correctly.

For the most common bitcoin on-chain addresses (starting with bc1), capitalization is not significant and can be entered in upper or lower case letters interchangeably. Nevertheless, it is always recommended to double-check the address before sending any transactions to avoid mistakes.