Bitcoin (BTC) has experienced a significant decline of 22.5% over the past month, briefly touching its lowest price in over a year last week. However, the cryptocurrency has since rebounded, inviting renewed discussions among analysts about the historical cycles, technical indicators, and on-chain data that may help pinpoint where this current bear market could find its bottom. With rising uncertainty, many experts are now closely monitoring key price zones below $40,000.
Data from BeInCrypto Markets reflects the volatility, showing a recent drop to $60,000 on February 6, after which prices managed a recovery, trading at $70,354 at the latest update—a 1.20% increase for the day. Nonetheless, a report from 10x Research indicates that the prevailing downtrend remains in effect, even as market sentiment and technical indicators approach extreme levels. Investor behavior suggests increased caution, evidenced by continued ETF withdrawals and rising conversions to stablecoins, signaling a hesitancy towards aggressive dip-buying.
“Positioning dynamics suggest traders remain focused on deleveraging and position unwinds rather than preparing for a typical snapback rally,” 10x Research noted. As speculation intensifies around finding Bitcoin’s bottom, several analysts caution against ruling out further declines, emphasizing attention on critical price points beneath $40,000.
Analyst Ardi has examined Fibonacci retracement levels associated with previous cycle bottoms, noting that Bitcoin’s lowest point in the 2022 bear market coincided with the 78.6% Fibonacci level, presently near $39,176. This indicates there may still be room for further downside. In contrast, analyst Nehal points to historical data suggesting that Bitcoin’s bear markets have become progressively less severe. For instance, declines of 93% in 2011, 86% in 2015, 84% in 2018, and 77% in 2022 suggest a pattern where each cycle’s drawdown is around 7% smaller than its predecessor. Based on these observations, Nehal speculates that a potential bottom near $38,000 may arise if Bitcoin peaked around $126,000.
On-chain data also plays a critical role in these analyses. According to analyst Ted Pillows, the long-term holder realized price, which indicates the average investment cost for long-term holders, shows that cycles typically bottom when prices fall 15% below this measurement. Currently, with the realized price around $40,300, this could suggest a bottom near $34,500, although Pillows expressed skepticism about reaching such lows.
Meanwhile, another analyst posits that Bitcoin might fully bottom out at $30,000 by the end of 2026 before beginning another aggressive multi-year rally, creating what could be a unique investment opportunity.
Contrarily, some analysts believe Bitcoin’s market bottom may already be behind us, diverging from the widespread expectation of a deeper bear market ahead. A pseudonymous analyst highlighted that Bitcoin often reaches its lows near levels that are least expected, noting former cycles where lows formed just below prior all-time highs. This skepticism towards another major crash stems from a belief that institutional involvement, spurred by developments like spot Bitcoin ETFs, has altered market dynamics, making it less likely for Bitcoin to drop below $50,000.
“Would institutions that just launched ETFs, on-boarded billions in capital, educated shareholders, and built infrastructure allow Bitcoin to revisit levels that invalidate their thesis? Unlikely,” asserted the analyst. Despite acknowledging the potential for volatility and scary pullbacks, they insisted that structurally, a price drop beneath $50,000 would necessitate a substantial breakdown in market fundamentals.
In a related note, analyst Darkfost pointed out that Bitcoin’s Sharpe ratio has reached a zone typically seen in the latter stages of bear markets, indicating that we are approaching a likely turning point. However, he clarified that this does not definitively signal the end of the current bear market, suggesting that price declines may continue in the coming months before a significant reversal occurs.
