K33 analysts indicate Bitcoin may be nearing the end of its bear market phase, drawing parallels with 2022 conditions and predicting prolonged consolidation.
K33 analysts suggest that Bitcoin is nearing the end of its bear market phase, drawing parallels with late 2022 market conditions.
Vetle Lunde, the firm’s head of research, noted that their proprietary market regime indicator reveals significant similarities to the market’s state in September and November 2022, when Bitcoin was approaching its lowest point.
This regime historically points to a local minimum followed by extended periods of subdued price activity rather than an immediate recovery.
Since January, Bitcoin has seen a decline of approximately 28%. Current derivative indicators reflect a cautious market stance, with negative funding rates persisting for over 11 days and futures open interest falling below 260,000 BTC.
Lunde mentioned that this situation, along with diminished leverage, reduces the chance of short-term price fluctuations due to derivatives. He anticipates Bitcoin will trade between $60,000 and $75,000 for an extended duration, describing current entry points as appealing but advising investors to exercise patience, as historical data shows an average return of about 3% over 90 days.
As of now, Bitcoin is valued at $68,000.
Market Sentiment and Institutional Activity
Institutional trading on the CME has been relatively quiet, while Bitcoin ETFs have experienced unprecedented net outflows, with 103,113 BTC withdrawn since October peaks.
Despite this outflow, institutional funds still maintain around 93% of their peak volumes, indicating a reduction in positions rather than a complete exit from the market.
The Fear and Greed Index recently reached a historic low of 5, but Lunde cautioned that this metric may not reliably indicate a strong recovery.
Historically, purchasing Bitcoin during extreme fear phases has yielded an average 90-day return of 2.4%, significantly lower than the 95% return seen during extreme greed periods.
Overall, the potential for further declines appears limited, akin to the later stages of the 2022 bear market. Lunde advises investors to brace for a lengthy consolidation phase before a more confident price recovery occurs.
Additionally, the "Bear Flag" pattern on Bitcoin's daily chart suggests a potential drop to $55,000.
