Summary
- Last week, Bitcoin dropped below $60,000, nearing its realized price, which is the average cost basis for market participants.
- According to CryptoQuant, this level often signifies key structural points for market bottoms.
- Despite this, demand appears to be waning, as indicated by notable outflows from Bitcoin ETFs.
Bitcoin’s recent decline below $60,000 marks a potential approach to a bear market bottom, as reported by CryptoQuant. However, the analytics firm warns that insufficient demand exists to support any meaningful price recovery.
CryptoQuant identifies the realized price—averaging the cost basis for all market participants—as a crucial indicator for Bitcoin. Currently, this price is estimated at around $53,600, approximately 13% lower than Bitcoin's trading price of about $61,680.
“Historically, Bitcoin has bottomed at or just below the realized price during major bear cycles,” analysts noted. “For instance, the FTX-induced bottom in November 2022 briefly dipped below this price before a structural rebound occurred.”
Despite a slight rebound after falling below $60,000, CryptoQuant expresses skepticism about the presence of adequate demand for a swift recovery in prices.
“A confirmed bear-market bottom or bullish reversal may require additional time to materialize,” the report states, “as both on-chain and derivatives data indicate a rapid decline in speculative and actual spot demand.”
Recent data combining liquidations and spot Bitcoin demand shows the most significant demand reduction in a single week since January 2022.
“There are fundamentally fewer Bitcoin buyers now compared to a year ago, which undermines the demand needed for any price recovery,” the report concluded.
The firm highlighted substantial ETF outflows as a “categorical reversal” indicative of declining demand. This trend was echoed by Michael Saylor, co-founder and Chairman of Strategy, who referred to the movement as “capital rotation, not a Bitcoin impairment.”
Since May 14, Bitcoin spot ETFs have recorded only one day of inflows, leading to total outflows exceeding $4.8 billion, according to Farside Investors.
Despite these trends, CryptoQuant observed that holders have not yet reached capitulation levels, suggesting that realized losses must increase to eliminate the supply overhang necessary for a sustainable price recovery.
Over the past week, Bitcoin has decreased by 6.6% and is now down 51% from its record high of $126,080.