Bitcoin is nearing a critical support level around $62,000, raising concerns about a potential downturn as a significant reserve-cost indicator linked to Binance suggests that further declines may lie ahead. This reserve cost level has not been approached since the U.S. approval of spot Bitcoin ETFs in January 2024, leading to speculation that the current price pullback could indicate a deeper bear market rather than a conventional correction.
The Binance Reserve RP, which indicates the average acquisition cost of Bitcoin held on the exchange, has historically served as a threshold demarcating bull and bear markets. Recent insights from crypto analyst Burak Kesmeci highlight that this indicator currently stands at $62,000, reflecting a notable increase from its pre-ETF average of around $42,000. This shift underscores the changing dynamics of the market, predominantly influenced by institutional investments, which have altered price behavior and raised the reserve cost.
Kesmeci mentioned that Bitcoin has not tested the $62,000 level since the approval of the Spot ETFs, noting that price action in the ongoing year will be pivotal in determining if this level holds as a structural floor or if it will give way to lower prices.
In addition to reserve-based indicators, on-chain metrics are also signaling caution. The recent uptick in Bitcoin’s Supply in Loss indicates a potential early-stage bear market formation. Historical patterns observed in previous cycles in 2014, 2018, and 2022 showcased that this metric began to rise before prices hit their respective lows. Currently, while the Supply in Loss is lower than levels seen during full capitulation, it suggests that the market could yet be undergoing the process of finding a solid bottom.
CryptoQuant’s head of research, Julio Moreno, proposes that Bitcoin’s realized price—the average cost basis of current holders—might guide potential bear market lows, estimating declines could range between $56,000 and $60,000 in the upcoming year. This projected range implies a drawdown of nearly 55% from Bitcoin’s all-time high above $125,000, which, while significant, would be comparatively mild relative to the pronounced losses of 70% to 80% typical in previous downturns, often exacerbated by widespread failures within the crypto sector.
On the technical front, additional bearish signals are emerging. The recent crossover of the 21-week and 50-week exponential moving averages—a pattern historically linked to deeper bear market phases—complicates bullish projections for the near future. Notably, previous instances of such crossovers occurred in 2014, 2018, and 2022, suggesting that the current phase may reflect a broader downturn rather than a prelude to recovery.
In the face of ongoing bearish sentiment, proponents like Binance’s Changpeng Zhao advocate for a Bitcoin “supercycle,” while researchers at Grayscale question the relevance of traditional four-year cycles. Bernstein maintains a $150,000 price target for 2026, interpreting the current market environment as an “elongated bull market.” However, whether these optimistic forecasts will materialize relies heavily on Bitcoin’s ability to regain its 50-week moving average, which presently sits near $100,988.
As the market grapples with over $4.5 billion in realized losses since Bitcoin fell below the $90,000 mark, the upcoming test of the $62,000 support level could significantly influence the narrative around the current market cycle. Analysts continue to maintain a focus on downside risk management, pondering the implications of the evolving market landscape and its potential trajectory.
