According to on-chain indicators reviewed by analysts at the crypto exchange Bitfinex, bitcoin ($BTC) still has some way to go before it bottoms out in this bear cycle.
The latest Bitfinex Alpha report revealed that the leading digital asset could decline further into the $40,000s by the end of this year as more investors exit the spot market.
A Possible Drawdown Into the $40Ks
In past market cycles, $BTC has always declined at least 70% from its all-time highs (ATHs) before bottoming out and recovering. During the 2022 bear market, $BTC fell 78% from $69,000, while in 2018, it plummeted 86% below cycle highs near $20,000.
Based on previous drawdown patterns and the time horizons between tops and bottoms, $BTC is likely to extend its ongoing decline into the $40,000s. The asset is currently 53.9% down from its $ATH of $126,000; dropping into the $40,000s will bring the decline to at least 68%. Additionally, analysts believe $BTC could reach its bear-cycle bottom in the fourth quarter of 2026 if cycle estimates account for price moves relative to moving averages.
Analysts say $BTC’s structural levels remain unchanged, even though the asset’s floor gave way over the weekend. With the coin trading near $60,000 at press time, it is positioned beneath the True Market Mean of $77,000, a level representing the average cost basis for active investors. This level also serves as a demarcation between bullish and bearish market regimes, so bitcoin’s price action will continue to be defined by a structural bear market environment.
Spot Demand Still Weak
After breaking below the $61,500 support level and falling to a new bear cycle low of $58,136 last week, $53,400 is now the key support level to watch. The move towards $58,000 reflects weakening spot demand as seen in short-term holder selling, exchange-traded fund (ETF) outflows, the collapse of the digital asset treasury channel, and negative gamma pressure.
Unlike previous declines, there were no large-scale liquidations and flushes in open interest as $BTC fell below $60,000 last week. This substantiated the fact that the fall was a structural exodus within the spot markets. With the market’s primary demand engine missing, bitcoin’s price is likely to remain weak and continue a downtrend in the coming weeks.
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“But the market awaits a resurgence of spot demand to be able to find a floor and potentially turn higher,” analysts explained.
