According to on-chain indicators reviewed by analysts at the crypto exchange Bitfinex, bitcoin (BTC) still has some way to go before it bottoms out in this bear cycle.

The latest Bitfinex Alpha report revealed that the leading digital asset could decline further into the $40,000s by the end of this year as more investors exit the spot market.

A Possible Drawdown Into the $40Ks

In past market cycles, BTC has always declined at least 70% from its all-time highs (ATHs) before bottoming out and recovering. During the 2022 bear market, BTC fell 78% from $69,000, while in 2018, it plummeted 86% below cycle highs near $20,000.

Based on previous drawdown patterns and the time horizons between tops and bottoms, BTC is likely to extend its ongoing decline into the $40,000s. The asset is currently 53.9% down from its ATH of $126,000; dropping into the $40,000s will bring the decline to at least 68%. Additionally, analysts believe BTC could reach its bear-cycle bottom in the fourth quarter of 2026 if cycle estimates account for price moves relative to moving averages.

Analysts say BTC’s structural levels remain unchanged, even though the asset’s floor gave way over the weekend. With the coin trading near $60,000 at press time, it is positioned beneath the True Market Mean of $77,000, a level representing the average cost basis for active investors. This level also serves as a demarcation between bullish and bearish market regimes, so bitcoin’s price action will continue to be defined by a structural bear market environment.

Spot Demand Still Weak

After breaking below the $61,500 support level and falling to a new bear cycle low of $58,136 last week, $53,400 is now the key support level to watch. The move towards $58,000 reflects weakening spot demand as seen in short-term holder selling, exchange-traded fund (ETF) outflows, the collapse of the digital asset treasury channel, and negative gamma pressure.

Unlike previous declines, there were no large-scale liquidations and flushes in open interest as BTC fell below $60,000 last week. This substantiated the fact that the fall was a structural exodus within the spot markets. With the market’s primary demand engine missing, bitcoin’s price is likely to remain weak and continue a downtrend in the coming weeks.

“But the market awaits a resurgence of spot demand to be able to find a floor and potentially turn higher,” analysts explained.

Source: CryptoPotato