“Bitcoin is now a more institutionalized macro asset, supported by ETFs, deeper liquidity, and a larger base of long-term allocators,” Jeff Ko, chief analyst at crypto exchange CoinEx, told Decrypt. “That is why drawdowns have been compressing across cycles, and I do not expect another 80% drawdown in the current cycle.”
"The holder composition of Bitcoin this cycle is very different from what we’ve seen in previous cycles,” Martin Lee, content & market insights lead at DWF Labs, told Decrypt. “We have the presence of institutions and corporations putting Bitcoin on their balance sheet. We do expect drawdowns to be more shallow and general volatility to be more muted as we’ve seen over the last 2 years.”
Does this mean the bear market bottom is in? Unlikely, experts told Decrypt, suggesting that it still has some way to go yet.
Despite a 50% drawdown representing a “meaningful reset,” Ko does not believe that the bear market is over.
Instead, the CoinEx analyst said investors should pay attention to “ETF outflows, macro tightening, and liquidity rotation.” That will help determine how prolonged a bear market can be, Ko said.
Alex Tsepaev, Chief Strategy Officer of B2PRIME Group, echoed Ko’s take, suggesting that the bear market is far from over. Instead, he said that the “current picture is bearish due to the combination of a chain of ETF outflows, macro pressure, and on-chain stress caused by both.”
“Since May 18, there has been only one day of inflows, on June 4, which shows how weak the passive bid has become,” Tsepaev highlighted.
Identifying a Bitcoin bottomBoth Ko and Tsepaev collectively highlighted $60,000 as the first key psychological level that matters, with a bearish scenario involving a retest of the $55,000 and $45,000 levels.
Ko highlighted a potential de-escalation of the geopolitical outlook as a critical catalyst that could help form a bottom for Bitcoin. A de-escalation on this front, Ko said, could lift the energy and risk-off overhang, opening the door to a dovish Fed turn, or at least a signal that further hikes are off the table.
Increasing ETF demand is the second catalyst highlighted by Ko.
On the altcoin front, the DWF analyst noted how Hyperliquid’s HYPE has diverged from the broader market trend. That is a “potential sign” of protocols being valued individually, based on their own merits, instead of being at the mercy of Bitcoin’s performance.
“Not every token will recover, and that’s simply a function of how markers are, assets get priced according to their merits over time—the same thing happens in equities,” Lee said.
