Bitcoin (BTC) has experienced a significant downturn, dropping 22.5% over the past month. The cryptocurrency briefly hit its lowest price in more than a year last week before showing signs of recovery. This recent pullback has sparked extensive discussions among analysts regarding historical cycles, technical indicators, and on-chain data that may indicate where Bitcoin”s current bear market could find its bottom. With uncertainty prevailing in the market, numerous analysts are now concentrating on critical price zones beneath $40,000.
Recent data from BeInCrypto Markets revealed that Bitcoin fell to $60,000 on February 6. Following this dip, the price recovered, with Bitcoin trading at $70,354 at the time of reporting, reflecting a 1.20% increase for the day. However, a report from 10x Research indicates that the overall downtrend is still in place, despite sentiment and technical indicators approaching extreme levels.
Investor behavior shows a cautious approach, as evidenced by ongoing ETF withdrawals and a rise in stablecoin conversions, suggesting a reluctance for aggressive dip-buying. “Positioning dynamics suggest traders remain focused on deleveraging and position unwinds rather than on preparing for a typical snapback rally,” 10x Research stated.
As the search for Bitcoin”s potential bottom intensifies, many analysts warn that further declines are possible, with a growing focus on price levels beneath $40,000. Analyst Ardi examined Fibonacci retracement levels associated with previous cycle bottoms, pointing out that Bitcoin bottomed at the 78.6% Fibonacci mark during the 2022 bear market. This crucial level currently sits around $39,176, indicating potential further downside.
In addition to technical analysis, historical trends offer valuable insights. Analyst Nehal shared findings that show Bitcoin”s bear markets have progressively less severe drawdowns over time. Historical data reveals that Bitcoin fell by 93% in 2011, 86% in 2015, 84% in 2018, and 77% during the downturn in 2022. Nehal suggested that if this trend continues, a drawdown of approximately 70% from a peak around $126,000 could imply a potential bottom near $38,000.
On-chain metrics are also crucial for analysis. Analyst Ted Pillows noted that the long-term holder realized price—which tracks the average cost for long-term investors—indicates that cycle bottoms typically occur when prices drop 15% below this figure. Currently, with the realized price at about $40,300, this model suggests a possible bottom around $34,500, although Pillows expressed skepticism about such a significant drop.
Furthermore, another analyst predicts that Bitcoin may fully bottom at $30,000 by the end of 2026, leading to an aggressive multi-year rally thereafter. This forecast implies that a substantial opportunity may arise for investors aiming to elevate their financial positions.
Conversely, some market analysts believe that Bitcoin”s market bottom may have already been reached, countering the prevalent expectation of another deep bear market phase. A pseudonymous analyst emphasized that Bitcoin often bottoms at levels least expected by the majority, highlighting previous cycles where bear market lows formed just below past all-time highs. They argued, “Most people think Bitcoin still has “one more big crash” left… and that belief alone is exactly why it probably won”t happen.”
The analyst further contended that the market structure has evolved due to factors like spot Bitcoin ETFs and heightened institutional involvement, which may alter Bitcoin”s behavior in downturns, making a drop below $50,000 less plausible. “Would institutions that just launched ETFs, onboarded billions in capital… allow Bitcoin to revisit levels that invalidate their thesis? Unlikely,” the analyst remarked.
Analyst Darkfost added that Bitcoin”s Sharpe ratio has fallen into a range historically linked to the later stages of bear markets. “This type of dynamic is precisely what tends to appear near market turning zones,” Darkfost noted, while also warning that this does not imply the bear market is over. Instead, it suggests that Bitcoin is nearing a phase where the risk-to-reward profile becomes increasingly extreme, with further price declines remaining a possibility before a significant reversal occurs.
The ongoing analysis of Bitcoin”s price action highlights critical levels to watch as traders navigate this complex landscape. With various indicators pointing to potential price zones and historical patterns, the discourse among analysts will continue to shape market sentiment.
