The current state of the crypto market resembles the final stages of the bear phase from 2022, according to analysts at K33.

Vetle Lunde, head of research at the firm, shared insights from their proprietary market regime indicator. This tool analyzes key metrics such as derivatives yield, open interest, ETF flows, and macroeconomic signals like the U.S. yield curve.

The results showed a "striking similarity" to the market conditions in September and November 2022, when the market was near its global bottom.

Historically, such a regime has indicated not a quick turnaround, but rather a local minimum followed by prolonged periods of weak price dynamics.

Since the beginning of January, Bitcoin has lost about 28%. Derivative indicators suggest a defensive positioning. Funding rates have remained negative for over 11 consecutive days, and open interest in futures has dropped below 260,000 BTC.

This situation, combined with reduced leverage, lowers the short-term risk of derivative-induced "squeezes," Lunde added.

He expects Bitcoin to trade in the range of $60,000 to $75,000 for an extended period. The analyst described the current entry levels as attractive but emphasized the need for patience. Historically, such regimes have yielded an average return of about 3% over 90 days.

As of this writing, Bitcoin is priced at $68,000.

Hourly chart of BTC/USDT on Binance. Source: TradingView.

Institutional Behavior and Sentiment

Institutional traders on the CME remain largely inactive. Meanwhile, Bitcoin ETFs have recorded a record net outflow: investors have withdrawn 103,113 BTC since the October peaks.

Despite the negative trend, funds still hold about 93% of their peak volume. This indicates that major players have reduced their positions but have not exited the asset entirely.

The Fear and Greed Index in the crypto market recently hit a historical low of 5 points, but Lunde believes this metric is not a reliable signal for strong rebounds.

Buying Bitcoin during periods of "extreme fear" has historically yielded an average 90-day return of 2.4%, compared to 95% when purchased during moments of extreme greed.

The potential for further declines is limited, similar to the late stages of the 2022 bear market. Investors should prepare for a prolonged consolidation period before prices begin to recover confidently, Lunde concluded.

As a reminder, the "Bear Flag" pattern on the daily chart of the leading cryptocurrency indicated the possibility of a drop to $55,000.