Bitcoin May Plunge to $40,000s Before Hitting Bottom, Bitfinex Analysts Say
Bitcoin (BTC) has further to fall before reaching its trough in the current bear cycle, according to an analysis of on-chain indicators by researchers at the crypto exchange Bitfinex.
The latest Bitfinex Alpha report suggests that the leading digital asset could see further declines into the $40,000 range by the end of the year as more investors exit the spot market.
Historically, BTC has experienced declines of at least 70% from its all-time highs (ATHs) before finding a bottom and beginning to recover. During the 2022 bear market, BTC dropped 78% from its peak of $69,000, and in 2018, it plummeted 86% from cycle highs near $20,000.
Based on these historical drawdown patterns and the typical timeframes between market peaks and troughs, analysts anticipate BTC’s current decline could extend into the $40,000s. The asset is currently down 53.9% from its ATH of $126,000. A drop into the $40,000s would represent a decline of at least 68%. Furthermore, if cycle estimates incorporate price movements relative to moving averages, analysts believe BTC could reach its bear-cycle bottom in the fourth quarter of 2026.
Despite the asset’s floor giving way over the weekend, analysts maintain that BTC’s structural levels remain unchanged. At the time of reporting, with the coin trading near $60,000, it is positioned below the True Market Mean of $77,000, which represents the average cost basis for active investors. This level also acts as a dividing line between bullish and bearish market conditions, indicating that bitcoin’s price action will likely continue to be dictated by a structural bear market environment.
Last week, after breaking below the $61,500 support level and hitting a new bear cycle low of $58,136, the key support level to monitor is now $53,400. The move towards $58,000 signals weakening spot demand, evidenced by selling from short-term holders, outflows from exchange-traded funds (ETFs), the collapse of the digital asset treasury channel, and negative gamma pressure.
Notably, unlike previous downturns, bitcoin’s fall below $60,000 last week did not involve large-scale liquidations or significant fluctuations in open interest. This suggests the decline was a structural exodus from spot markets rather than a forced deleveraging event. With the market’s primary demand driver absent, bitcoin’s price is expected to remain weak and continue its downward trend in the coming weeks.
“The market awaits a resurgence of spot demand to establish a floor and potentially turn higher,” the analysts explained.
Leave a Reply