Bitcoin’s recent struggles have prompted renewed caution from financial analysts. Alex Thorn, Head of Firmwide Research at Galaxy Digital, indicates that the cryptocurrency may experience a significant downturn, potentially sliding toward the $58,000 mark. Currently hovering around $78,000, Bitcoin’s inability to regain its previous bullish momentum is causing concern among market observers, especially as nearly half of its circulating supply is now considered “underwater,” meaning these holders acquired their Bitcoin at higher prices.
The precarious situation is further complicated by Bitcoin’s current position relative to its 200-week moving average (MA), which is historically a critical support level situated near $58,000. This level has held as a robust floor in previous market cycles, notably during 2015, 2018, and 2022. According to Thorn, if Bitcoin fails to stabilize, the risk of capitulation—where holders sell off in panic—could increase, thereby adding additional selling pressure.
The context for this caution is a broader market environment characterized by rising risk aversion. While other financial assets like equities and commodities are beginning to stabilize, Bitcoin has lagged, failing to reclaim significant resistance levels. This marks a stark contrast to Galaxy Digital’s earlier optimistic projections, which suggested Bitcoin might reach $250,000 by 2027. However, the company now expresses a more tempered outlook, indicating increasing downside risks in the near term.
Another troubling indicator is the thinning liquidity around the $70,000 to $80,000 range, where there has historically been limited trading activity. If Bitcoin breaks support in this zone, price movements could accelerate downwards due to the lack of historical buying interest.
Moreover, Bitcoin’s recent performance challenges its longstanding narrative as a digital gold and hedge against inflation. Its decoupling from traditional safe-haven assets like gold and silver undermines investor confidence, particularly amid macroeconomic uncertainty that might usually favor Bitcoin’s appeal. The options market reflects this sentiment, showcasing divided opinions on whether Bitcoin will trade closer to $70,000 or surge to $130,000 by mid-2026.
Despite the pessimistic outlook from some quarters, not all analysts align with Thorn’s bearish perspective. Veteran trader Peter Brandt has suggested that while Bitcoin may dip to $58,000, it could subsequently initiate a robust rally towards $200,000, viewing this period as a corrective rather than a terminal phase of the market. Historical trends show that Bitcoin rarely remains below the 200-week MA for extended periods, with previous dips at this level often leading to significant price recoveries.
In summary, while there is a hint of impending turbulence for Bitcoin, the potential for a long-term opportunity remains, particularly for investors willing to navigate the risks. As the market continues to evolve, the coming months will be pivotal in determining Bitcoin’s trajectory and the broader landscape of cryptocurrency investing.
