Bitcoin may continue its downtrend as there are few catalysts to reverse the cryptocurrency’s recent losses, according to Galaxy Digital research lead Alex Thorn.
In a note on Monday, Thorn said there is a “significant chance” that in the coming weeks, Bitcoin could drop to the bottom of a supply gap at $70,000 before testing its realized price of $56,000—the average cost of all BTC currently in circulation.
“Catalysts remain hard to find, and narratives are also working against Bitcoin, as it fails to move in line with gold and silver in a broader ‘debasement hedge trade,’” Thorn added.
Bitcoin rose 3% on Monday to just under $78,500, recovering from a nine-month low. The cryptocurrency remains down 39% from its all-time high of over $126,000 in early October, according to CoinGecko.
Bitcoin could find support at its realized price
Thorn noted that Bitcoin has historically traded below its realized price during the bottom of previous bear markets and typically finds support “around or slightly below” this level before climbing higher.
He also highlighted the 200-week moving average as a key support level. In past cycles, Bitcoin has found strong support at the 200-week average whenever it fell below the 50-week moving average. Bitcoin lost support at its 50-week moving average in November, while its 200-week moving average currently sits at $58,000.
“These levels have historically marked cycle bottoms and offered strong entry points for long-term investors,” Thorn said.
Long-term holders’ slowing sales could signal a bottom
Alex Thorn noted that there is “little evidence of significant accumulation” from large buyers and long-term holders, which could keep Bitcoin’s price under pressure as buyers may be waiting for lower levels before entering.
However, he added that long-term holder profit-taking, which often drives prices down, has “begun to notably abate.” Thorn cautioned that some holders may still be waiting to sell at higher prices, creating resistance to upward movement.
“Nonetheless, the recent decline in long-term holder realized profit-taking is notable and should signal we are closing in on a bottom,” he said.
Market structure bill unlikely to be a major catalyst
The crypto industry is closely monitoring the U.S. Senate for a potential market structure bill that would outline sector regulation.
Thorn said that while passage of the legislation “could act as a near-term exogenous catalyst, odds of passage have diminished in recent weeks.” Bipartisan support has been difficult to secure, and momentum has stalled as the Senate Banking Committee has yet to reschedule a meeting to advance the bill.
Even if the legislation passes, Thorn noted that “any positive momentum generated is more likely to benefit altcoins than Bitcoin.”
