Bitcoin rebounds to $79,200, "Shorts Liquidated for $230 million," Galaxy warns: Will continue to decline and test $70,000

Bitcoin rebounded to $79,200 this morning, seemingly ending the panic sell-off, but Galaxy Research Director warns that prices will continue to decline in the coming months, possibly dropping to the $70,000 level
(Background: JPMorgan successfully predicted the “gold-silver double kill”: gold and silver overheating, Bitcoin oversold! But the long-term gold price outlook remains at $8,500)
(Additional context: Bernstein: Bitcoin may bottom at $60,000, with the potential to reverse its downward trend and “enter a new cycle” by 2026)

Today (1), Bitcoin’s price showed signs of recovery. After rising to $79,200 overnight, the current price has retreated to around $78,566, with a 24-hour gain of only 0.2%. Ethereum dipped to $2,157 yesterday afternoon but has since risen close to $2,400, currently trading at $2,349.

Since yesterday afternoon’s decline, a significant number of short positions have accumulated, but this morning’s rebound caught the short sellers off guard. According to Coinglass data, liquidations within 24 hours still reached $548 million, with 12-hour liquidations concentrated on shorts totaling $102 million. The heatmap also shows that a large portion of liquidated positions come from altcoins like HYPE.

Experts Warn of Rebound Trap

Although the price appears to be recovering, Galaxy Research Director Alex Thorn posted on X warning that on-chain data, key technical levels, macro uncertainties, and the lack of clear short-term catalysts all suggest that BTC could continue to weaken over the next few weeks to months, potentially testing the 200-week moving average. Historically, these levels have often been excellent entry points for long-term investors.

From January 28 to January 31, Bitcoin declined by 15%, accelerating its downward move over the weekend. On Saturday alone, it dropped 10%. Currently, about 46% of Bitcoin supply is in unrealized loss. After January’s close, Bitcoin experienced four consecutive monthly closes in the red for the first time since 2018. Aside from the unique year of 2017, Bitcoin has never historically retraced 40% from its all-time high (ATH) and then failed to further decline by over 50% within three months. A 50% retracement from the current ATH would be around $63,000.

There is a clear on-chain vacuum between $82,000 and $70,000, increasing the likelihood of a short-term dip to test demand in that range. The current realized price is about $56,000, and the 200-week moving average is around $58,000. There is still no clear evidence of whales or long-term holders significantly increasing their holdings, but profit-taking among long-term holders is slowing. Short-term catalysts remain scarce; Bitcoin has failed to participate in the “currency devaluation hedge trade” alongside gold and silver, which is also unfavorable from a narrative perspective. Although the passage of the Crypto Legislation (CLARITY Act) could serve as an external catalyst if approved, the probability of passing in the near term has decreased. Even if it passes, its positive impact is more likely to benefit altcoins rather than BTC.

Although BTC may fluctuate around a maximum discount of about -10% relative to ETF cost basis (currently around $76,000), the combined factors suggest a high probability of further decline toward the supply gap bottom near $70,000, with potential testing of the realized price ($56,000) and the 200-week moving average ($58,000). The timeframe could be from several weeks to months. Historically, these levels often mark cycle bottoms and provide strong entry opportunities for long-term investors.