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BTC Wintermute pointed out that Bitcoin's bottom decline is narrowing and the market structure has undergone a historic shift.
Bitcoin's recent decline has been more moderate than previous bear markets. According to Wintermute analysis, on the 340th day after hitting a high point, the price of Bitcoin fell by about 50% from its peak; while in the same period in 2018 and 2022, the decline exceeded 75%. The trading company believes that Bitcoin's cycle bottom is forming with a gradually shrinking retracement, although it has not confirmed whether June this year will be the final low.
The retracement is gradually decreasing
In its latest market update, Wintermute pointed out significant changes in the structure of the Bitcoin cycle: previous bottoms were formed after declines of 83% and 77%, while the current retracement is about 50%. "The bottom of each cycle is getting shallower: from 83%, to 77%, to 50%." Wintermute wrote.
This difference is also reflected in the time required for recovery. In the bear markets of 2018 and 2022, 340 days from the peak, Bitcoin prices were still more than 75% below their peak. Subsequent cycles will take more than 500 days to recover to current levels. Wintermute attributed the smaller retracement to earlier market participation by exchange-traded funds (ETFs) and institutional investors. In addition, as profits from some investors flow to another group, the improvement in market breadth is similar to that in the early stages of the new cycle.
This view is being tested by current price trends. According to CoinGecko, as of press time, Bitcoin is about $79,000, up more than 2% in the past seven days and nearly 22% in the past 30 days. It is worth noting that last week, when the market reacted strongly to the U.S. employment data, Bitcoin did not lose its weekly gain and once climbed to US$82,400. Later, the release of non-agricultural data caused it to fall back by about US$3,000 in a few minutes, but it still ended up closing above US$80,000 with a 3.45% increase.
Although Bitcoin ETF experienced an outflow of more than US$46 million yesterday, these products have provided another layer of support to the market recently. Last week, ETFs recorded inflows of nearly US$987 million, the third consecutive week of positive inflows, bringing cumulative inflows for this period to more than US$3.8 billion.
The pace of return to the capitulation zone is slowing
Meanwhile, Alphractal founder Joao Wedson has been tracking the "Balanced Price" of Bitcoin. The indicator is built based on old Bitcoin spending patterns and has accurately marked the bottom of deep cycles in the past. The indicator is currently around $38,400, but analysts note that this does not mean prices have to fall back to this level.
The intervals between the indicator's main touch points are expanding in each cycle to 732 days, 1,120 days, 1,200 days and 1,420 days, respectively, and the time Bitcoin stays under the indicator has also shortened from a few weeks to about one day in 2022. Trader Killa expects Bitcoin to hit a new high before November 2027, citing the fact that this cycle has bottomed and peaked faster than previous cycles.
