Bitcoin has recently fallen below the $60,000 mark for the first time in 2024, prompting discussions about the possibility of nearing a bear market bottom. According to a report from analytics firm CryptoQuant, this decline indicates that there may not be sufficient demand to support a price rebound in the near term.
Central to the analysis is Bitcoin’s realized price, defined as the average cost basis for all market participants. CryptoQuant estimates this price to be around $53,600, which is approximately 13% lower than the current trading price of around $61,680. Historically, Bitcoin has tended to bottom out at or slightly below this realized price during previous bear cycles. The firm highlighted that during the November 2022 downturn, influenced by the FTX collapse, the price momentarily dipped below the realized price before witnessing a structural recovery.
Despite a slight bounce-back since Bitcoin’s fall below $60,000, CryptoQuant does not foresee a robust demand that would facilitate a significant price recovery in the immediate future. The report notes, “A confirmed bear-market bottom or bullish reversal may still take time to develop.” This sentiment is substantiated by data indicating a sharp contraction in both speculative and apparent spot demand. The combination of long liquidations and declining spot Bitcoin demand pointed to what was described as the “most severe single-week demand destruction since January 2022.”
Furthermore, the report emphasizes that there are significantly fewer Bitcoin buyers compared to the previous year. This decline in demand undermines the necessary foundation to sustain any potential price recovery. The firm also observed considerable outflows from spot Bitcoin exchange-traded funds (ETFs), which it characterizes as a “categorical reversal.” This trend was echoed by prominent Bitcoin advocate Michael Saylor, who referred to the capital movement away from Bitcoin as “capital rotation, not a Bitcoin impairment.”
Since May 14, spot Bitcoin ETFs have experienced only one day of inflows, resulting in total outflows exceeding $4.8 billion, as reported by Farside Investors. However, CryptoQuant noted that Bitcoin holders have not yet reached capitulation levels. Realized losses among holders will need to accelerate to alleviate the supply overhang, which is deemed necessary for a sustainable price recovery.
In the past week, Bitcoin has experienced a decline of 6.6%, positioning it 51% off its all-time high of $126,080. The current market conditions signal a cautious outlook as analysts and investors alike brace for what may come next.
