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The DeFi Report, a cryptocurrency analysis and data platform, shared a comprehensive assessment of Bitcoin ($BTC) and the broader cryptocurrency market in its latest report.
Analyzing the bear market that has lasted for approximately 9.5 months (287 days), analysts have made critical observations at the intersection of on-chain metrics, buyer group behavior, and global macroeconomic risks.
According to analysts at The DeFi Report, based on past bear market cycles that averaged one year, approximately 80% of the current downturn is behind us. Noting that the market has experienced three major corrections exceeding 30% so far, the analysts highlighted investor psychology and types of capitulation.
In addition to panic selling triggered by sharp market declines, “time-based erosion,” caused by prices remaining in a narrow range for extended periods, continues.
Investors who bought at peak levels have transferred 52% of their Bitcoin holdings to new, longer-term holders. The group that bought Bitcoin between $92,000 and $108,000 has shown surprising resilience, selling only 18% of their assets. However, analysts predict that if the process continues, the sell-off in this group could climb to 20% to 30%.
The company, which considers $65,000 as the fair value for Bitcoin, highlighted the number of days $BTC traded below or around this level. During the 2022 bear market, there were 107 days below fair value, while in the current cycle, this period has only reached 47 days so far. The fact that the market capitalization decline has remained at 5.8%, compared to the 19% losses in previous cycles, indicates that the market has matured and that spot ETFs are supporting the market. Nevertheless, analysts continue to estimate the probability of the price making a new low at 65%.
The report highlights two key levels regarding the direction of the Bitcoin price. The first is the $63,000 level, which is the main lower support zone the price is trying to hold above. The second is the $70,000 to $73,000 range, which represents the upper resistance and support reversal zone that needs to be overcome for bull market confirmation and a break of the bear trend. Unless there is an extra systemic collapse in the sector, $BTC is expected to form a time-sensitive bottom in the $60,000 to $70,000 range. However, a sharp shock could send the price into the deep value zone between $50,000 and $55,000.
The DeFi Report also devoted considerable space to broader macroeconomic threats that could impact the crypto market. Rising oil prices due to tensions in the Middle East and risks to the Strait of Hormuz could push inflation figures back up, potentially leading the Fed to remain hawkish on interest rate policies. Furthermore, the report suggests that speculation saturation in the AI sector, driven by the introduction of cheaper models, could trigger a wave of risk aversion in the overall markets.
*This is not investment advice.