Summary Bitcoin has entered a bear market, breaking key support at $97,000 and seeing institutional outflows from US Spot Bitcoin ETFs. Unlike previous cycles, BTC's downside is likely limited by institutional cost-basis floors around $89,000, reducing the chance of a 70-80% drawdown. The cycle's earlier peak suggests a shorter, shallower bear market, with accumulation opportunities near $85,000 and strong support at $60,000. Long-term bullishness remains due to macroeconomic debasement, adoption trends, and institutional support, making this a period for patient accumulation. Thesis Summary It has become very clear that Bitcoin USD ( BTC-USD ) is in a bear market. I outlined in my last post that we were getting close to breaking $97,000, a key support area that provided a good place to go long, but if broken, would signal the end of the bull market. There’s now a wide consensus amongst most investors that Bitcoin may be heading much lower. But as we know, most of the time, the crowd is wrong. Only weeks ago, most were calling for another all-time high in Bitcoin. This cycle, Bitcoin rallied sooner and less than expected. I think it’s reasonable to believe the bear market will be shallower and perhaps shorter. For anyone not trading with leverage, this is just a matter of sitting back and continuing to accumulate at the key value areas. The Bull Thesis Broke This price action confirms the following bearish realities. BTC TA (Trendspider) For starters, we broke below the 50-week EMA at $97,000, and I already said this was a key line in the sand. While I was wrong to be bullish near this area, I did warn investors to keep a tight stop at that level, and indeed the sell-off quickly accelerated once it broke it. On the other hand, the institutional demand that helped Bitcoin get two six figures has now reversed course. Recent data confirms that US Spot Bitcoin ETFs have transitioned to sustained net outflows, indicating professional, systematic profit-taking. T Lastly, while the Fed has talked about ending Quantitative Tightening (QT), the market is discounting it. The dollar ( DXY ) strength persists, and the latest Fed talk has been rather hawkish. This Correction Is Different But it would be a mistake to assume that because the bull market topped, the subsequent bear market will look like 2018 or 2022. The structural changes of this cycle, which we analyzed previously, now work to mitigate the downside. This will not be a typical 70-80% drawdown "Crypto Winter." This will be a "Damped Bear," defined by institutional price floors. The ETF Cost-Basis Floor The massive institutional capital that entered the market via the US ETFs established a significant cost-basis floor. According to recent on-chain analysis, the average acquisition price of the Bitcoin absorbed by these long-term institutional holders and ETF investors hovers around $89,000. Unlike retail, institutions are not prone to panic-induced selling. They are mandated to hold or manage risk systematically. When price falls below the institutional cost basis, this creates an instant value proposition for fund managers looking to achieve their target allocation at a discount. The historical 70%+ drawdowns (from $20k to $3k in 2018, or $69k to $15.5k in 2022) are unlikely to repeat, as the market is now underpinned by multi-billion-dollar, regulated funds that will act as a counter-pressure to retail capitulation. The Cycle Compression Hypothesis The defining anomaly of this cycle was the front-running of the Halving and the All-Time High. The institutional money pulled the price discovery phase forward, leading to an earlier peak. BTC Cycle (CryptoRover) Logically, an earlier peak must lead to an earlier bottom. Normally, we’d expect a bear market of 12-18 months, but if we peaked earlier and bottomed earlier, then the bottom could happen much sooner. How And When To Buy I don’t plan to take this sell-off as a chance to short Bitcoin or try to get too cute about buying back lower. The underlying reasons to hold Bitcoin, the continued need for debasement in a debt-fuelled economy, remain intact. Paired with increased adoption, tokenisation of real-world assets, and an eventual return to more favourable liquidity dynamics, it makes me long-term bullish. The easy and arguably most effective course of action is to play the long-term trend and accumulate over the coming months. BTC TA (Trendspider) The current price is already tempting, as we find support near the $85,000 level. Below this, the 200-week EMA acts as strong support, with a considerable amount of volume support at around $60,000. This would be roughly a 50% sell-off from the peak and an ideal place to accumulate more. Other key signs to look for would be an oversold weekly RSI, a bullish divergence and highly bearish sentiment, which is already in place and could lead to a bounce. Crypto Fear And Greed (CoinMarketCap) The bear market won’t be quick and painless. It will take a few months, and Bitcoin may not move much in terms of price. But this is when good investors will be quietly accumulating. Final Thoughts Of course, a global recession or AI-related overvaluations could still derail Bitcoin. The asset is not immune to global macro. But I still believe it is long-term, one of the best ways to stay ahead of the debasement trade.
