Bitcoin’s abrupt drop to the $80,000 zone shocked traders, but back-tested data on multiple indicators suggests the market wash-out may be setting up for a longer-term rally to new highs.Key developmentsBTC’s monthly draw-down has reached around 23%, the steepest since June 2022.The price action has also tested the 100-week exponential moving average (EMA) for the first time since October 2023 — matching the start of the current bull cycle.Futures liquidations exceeded $1 billion, pointing to large forced exits across the market.The total crypto market cap has slid from about $4.2 trillion to $2.8 trillion, a 33% drop since early October.Fund and ETF outflows continue to rise, reinforcing structural selling pressures.A liquidity signal points to a possible bottomDespite the weak price action, one on-chain metric stands out: the spot bid-ask delta at 10% depth has surged to the second-highest level of 2025, indicating that buyers are stepping in during the decline. Historically, similar spikes preceded major bottoms and rallies. Analysts say if this pattern holds, a bottom could form in the coming weeks.Macro angle: Fed repricing and rate-cut expectationsIncreasing expectations of a U.S. Federal Reserve rate cut in December are helping support Bitcoin’s rebound. The odds of a cut have recently jumped, driven in part by dovish comments from senior Fed officials. While this shift is positive for risk assets, analysts caution the transition from rate hikes to easing may still take time, limiting the upside in the near-term.Why analysts warn of a bull trapSeveral factors suggest caution remains warranted:Digital asset treasury firms are trading below net asset value, limiting institutional accumulation.Spot Bitcoin ETF flows remain weak, not yet verifying a structural reversal.Technical and options market data show heavy exposure to downside, with puts clustered in the $85K–$80K range.“Pessimism may have peaked, but I’d be cautious of walking into a bull trap,” said one leading options researcher.Outlook: Bottoming range and scenario planningBase case: Bitcoin may consolidate in a $80K–$88K range while liquidity conditions improve and ETF flows stabilise.Bull case: If the liquidity indicator continues to trend lower (e.g., from the current level toward -0.60 on the NFCI), a rally toward $100K+ could unfold by early 2026.Bear case: Failure to stabilize could push BTC down into the $70Ks before a durable bottom forms.In summary: Bitcoin’s current streak of losses is painful but may be part of a larger market reset. Real-time liquidity signals and macro repricing provide tentative hope for a turn-around. However, structural pressures remain entrenched and caution continues to be advised, according to Decrypt.
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