Bitcoin (BTC) made a notable recovery on Friday, witnessing a 4% surge that led the leading cryptocurrency to retest the critical $74,000 resistance level, which has remained unbroken for the past month.
However, even with this upward movement, the cryptocurrency has retraced to approximately $72,215, establishing itself at the upper boundary of its ongoing consolidation range.
Further Declines For Bitcoin Ahead?
Analyst Sunny Mom from CryptoQuant emphasizes that, despite these recoveries, Bitcoin has yet to establish a definitive bottom. She suggests that further price declines may be ahead, as current on-chain data reveals that the market is in a significant “stress test” phase.
Diving into the data, Sunny identifies several key factors that indicate the challenges ahead for Bitcoin. First, she points to the 6-12 month cohort of investors, who are currently underwater due to their Realized Price (RP) being concentrated around $100,000.
This means that many of these mid-term holders are seeing losses, which could continue to exert downward pressure on prices until this imbalance resolves.
Sunny also highlights the MVRV (Market Value to Realized Value) ratio, which stands at 1.2. This figure is commonly regarded as a “DCA (Dollar-Cost Average) zone” for “smart money.” However, substantial cyclical bottoms typically require the MVRV to be less than 1.0, indicating a state of capitulation.
Furthermore, the importance of long-term holders (LTHs) cannot be overstated. A sustainable price floor generally requires that LTHs—those who have held their positions for over two years—constitute more than 20% of the Realized Cap.
Currently, they make up only about 15%, suggesting that the market lacks the robust structural support needed for a strong recovery. She outlines two potential paths for how Bitcoin could find its bottom.
Two Potential Paths To Find A True Bottom
The first involves a “Black Swan” event—a sudden crash that triggers forced liquidations among high-cost investors. Although painful, Sunny believes this scenario could lead to a faster establishment of a solid Bitcoin price floor, potentially within one to two months.
The second path, referred to as “The Great Boring,” envisions institutions maintaining their positions, allowing Bitcoin to trade in the $60,000 to $80,000 range for an extended period.
The analyst asserts that this would enable new investments to mature into long-term holdings, setting the stage for a bottoming process that could extend into late 2026 or early 2027.
While the market may be at a “Value Bottom” conducive to long-term dollar-cost averaging, Sunny’s analysis suggests that a true “Structural Bottom” for Bitcoin has yet to form. Consequently, she noted that volatility within the $60,000 to $70,000 range is anticipated.
Featured image from OpenArt, chart from TradingView.com
