Analysis Suggests Market Transitioning into Downtrend
Bitcoin (BTC) has fallen to four-month lows of $98,900, prompting analysts to suggest that the market may be entering a macro downtrend and transitioning into a bear market.
Data from Cointelegraph Markets Pro and TradingView indicates that Bitcoin price action has established a new range on lower time frames. Market observers are closely watching key support levels below the current price.
Indicators Point to Increased Risk and Reduced Speculative Appetite
Private wealth manager Swissblock has observed that the Bitcoin risk-off signal has destabilized due to intensified selling pressure over the past few days. While the indicator remains within a low-risk regime, Swissblock noted that a transition into a high-risk regime would signal a potential trend shift.
"If the indicator enters and stays in a high-risk, it would suggest that Bitcoin is transitioning into a bear market, marking a structural change rather than a short-term correction."
Onchain data provider Glassnode further supports this observation, highlighting a significant decline in the monthly funding paid by longs in Bitcoin perpetuals. This funding has decreased by approximately 62%, from $338 million per month in mid-August to $127 million per month as of Tuesday. This reduction in bullish leverage often precedes price tops and indicates a potential bearish shift in the broader market trend.
"This underscores a clear macro downtrend in speculative appetite, as traders grow reluctant to pay interest to maintain long exposure."
Analyst Mikybull Crypto also stated, "Bear market confirmed," pointing to the breakout of the USDT market dominance from an inverse head-and-shoulders pattern in the weekly time frame. Similar formations in previous cycles have historically led to bear markets.
A breakout in USDT dominance suggests a rising preference for stablecoins, which indicates risk aversion and capital exiting Bitcoin and other cryptocurrencies. This trend typically pressures BTC price downward in the short term, reflecting bearish crypto market sentiment and potential further declines as capital is sidelined.
Key Bitcoin Price Levels to Watch
The recent sell-off has caused the BTC/USD pair to drop 20% from its all-time high above $126,000. Bitcoin has also fallen below the short-term holders’ cost basis of around $113,000, a structure that has historically preceded the onset of a mid-term bearish phase as recent buyers continue to capitulate.
Glassnode reported that Bitcoin has lost the support at the 85th percentile cost basis, which is around $109,000. The next key level identified is around the 75th percentile cost basis, approximately $99,000, which has historically provided support during pullbacks.
Trader Daan Crypto Trades noted that Bitcoin has broken below its October 10th low, which was around $103,500. This level represents the last major support before the $98,000 low reached in June due to geopolitical concerns.
The Bitcoin liquidation heatmap indicates a high concentration of liquidations near the June lows, around $98,000. This area, marked by a cluster of leveraged positions, suggests it is a key support level. If $98,000 is breached, it could trigger a liquidation squeeze, potentially driving prices to $95,000, where the next major liquidity cluster lies.
On the upside, ask orders are building up around $102,500, with a larger cluster located between $103,000 and $105,000.
Selling pressure from long-term Bitcoin holders, capitulation by short-term holders, and a daily candlestick close below the psychological $100,000 level could lead to further price declines for BTC, potentially reaching as low as $72,000.