Bitcoin’s Vetle Lunde, head of research at K33, said the sharp sell-off earlier this month may be giving way to the late stages of a bear market, but investors shouldn’t count on a quick economic recovery.
“The current situation is very similar to late September and mid-November 2022, which were near bear market bottoms and were followed by long-term consolidation,” he wrote.
At the time, Bitcoin prices were hovering between $15,000 and $20,000, about 70% below their 2021 peak.
Now that Bitcoin has settled into a quiet range between $65,000 and $70,000, K33 Research’s institutional model (which combines derivatives data, ETF flows, technical signals and macro signals) suggests that the market is approaching a cyclical trough.
Quiet grinding
One of the signs of a period of quiet consolidation is a significant drop in trading activity and a complete elimination of excessive speculation.
The K33 report pointed out that spot trading volume fell by 59% month-on-month. At the same time, perpetual contract positions fell to a four-month low, and financing rates remained negative across the board.
Lund said such cooling-off periods are typical after large-scale liquidations as market participants absorb losses and reset their positions.
Meanwhile, exposure to U.S.-listed Bitcoin ETFs has fallen by 103,113 BTC from peak to trough since early October, reaching a record high. Even so, Lunde noted that peak exposure in Bitcoin terms is still over 90% given that BTC has retraced nearly 50%.
Sentiment indicators also paint a bleak picture, with the “Crypto Fear & Greed” index falling to an all-time low of 5 last week and hovering below 10 for much of the past week.
long term value area
What does this all mean? Lunde said Bitcoin “may be near or at a global bottom, but will consolidate between $60,000 and $75,000 for the long term.” Similar historical regimes have brought meager returns
However, he believes that for investors with a long-term view, current levels are attractive for accumulation, although patience may be required.
James Check, an on-chain analyst and co-founder of Checkonchain, also pointed out that Bitcoin’s sideways cycle is an opportunity to build a position.
He said Bitcoin “does nothing” most of the time and then tends to have sharp repricing bursts rather than a steady trend. These explosive phases are typically clustered within a few trading days, typically early and late in a bull market cycle.
“Most of the time it does nothing and sometimes it goes up 100% in a quarter and if you’re not in that quarter you miss the whole run.”
He warned investors not to try to perfectly time tops and bottoms, as they often miss the initial surge.
In other words, long periods of consolidation can be frustrating, but historically the market has rewarded patient positioning, not timing.