Bitcoin price is entering one of its most vulnerable periods in the cycle. The price action speaks for itself. On-chain data screams it. And the overall crypto atmosphere is tense and almost fragile
Bitcoin prices fell to a low of $80,524 on Friday, the lowest since April and a level many did not expect to reach again this year. The decline took Bitcoin’s price more than 35% below its all-time high, wiping out all of its gains since the beginning of the year and dragging down overall market risk sentiment.
Since the crash, Bitcoin prices have recovered to the $84,000 level, demonstrating high volatility across the crypto market.
Realized losses have soared to levels last seen during the FTX capitulation in November 2022, according to Glassnode data. Short-term holders who bought within the past 90 days are releasing capital in a big way. Now their sales dominate the tapes. The preponderance of realized losses has skyrocketed to a range that usually causes panic.
The market structure is also collapsing. Independent analyst MEKhoko noted that Bitcoin is currently trading more than 3.5 standard deviations below its 200-day moving average. This type of deviation has only appeared three times in the past decade: late 2018, the March 2020 crash, and the Three Arrows/Luna meltdown in June 2022. Each event was marked by moments of extreme fear, forced sales, and exhaustion.
This week feels similar. Funding rates have plummeted. Spot sellers came forward. Momentum traders are gone. The market’s marginal buyers, those chasing strength, simply stepped aside.
The result is a chart stretched to its limits and a community dedicated to understanding it.
Some point to macro pressures. Hopes for a rate cut have disappeared. AI stocks have plummeted. Volatility spiked across traditional markets. Cryptocurrency had no chance of winning.
Nevertheless, the Bitcoin price pullback has mostly reached the $78,000-$82,000 zone of Giovanni Santostasi’s Bitcoin power law model, which historically produces mid-cycle rebounds rather than cycle lows, giving bulls a glimmer of hope as the price revisits several previous levels in 2024.
Some people point to a “mechanical glitch” on October 10th. Tom Lee said that a glitch in the stablecoin’s price feed caused cascading liquidations across exchanges. Nearly 2 million accounts were deleted before anyone realized what was happening. Since then, the market has “continued to drag its feet”, he claimed.
On October 10th, the crypto market experienced a massive “flash crash” and deleveraging event in the wake of the unexpected US tariff announcement that shocked global markets. As a result, more than $19 billion in leveraged positions were liquidated within hours, making it one of the largest single-day wipeouts in crypto history. The remains of the crash can still be felt.
Still others believe there is deliberate pressure. Mike Alfred has accused major corporations of pushing down Bitcoin through derivatives. Lee said he agreed.
Unless key levels recover, the probability of a retest of the all-time high in the coming weeks is below 50%.
Bitcoin price outlook
Analysts at Bitcoin Magazine believe that the core message of buying every dip is no longer a reliable strategy. In a downtrending market, multiple failed declines are common, and short-term holders’ realized prices, which have historically been the linchpin of recovery, are now acting as resistance. Meanwhile, broader cost-based metrics such as realized prices and 200-week moving averages are in the mid-$50,000s and rising slowly, suggesting a final value zone could develop into the $55,000 to $65,000 range or even higher, depending on how long the downturn lasts.
Demand and supply indicators are showing increasing caution. The VDD multiple continues to rise even as prices fall, indicating that experienced holders are diversifying rather than accumulating. The supply of long-term holders is also decreasing, again indicating that the market unwinding is still continuing. Funding rates and derivative positioning have not shown the typical extreme declines seen at major bottoms.
To deactivate the bear market, Bitcoin needs to regain $100,000, STH realized price, and 350DMA in continuous closes. Until then, it’s defensive >
This post sees Bitcoin price flash crash to $80,000 before rebounding as market stress approaches FTX-era levels. Originally published in Bitcoin Magazine and written by Micah Zimmerman.
