Bitcoin's "Ironclad Price" Emerges! Compass Point Analyst: Cryptocurrency Bear Market Nearing the End

After the weekend crypto market massacre, cryptocurrency investors may still be feeling shaken, but US investment bank Compass Point believes that this round of the crypto bear market may be coming to an end. According to a report released on Monday by Compass Point analysts Ed Engel and Michael Donovan, while the short-term sentiment in the crypto market remains bearish, the likelihood of Bitcoin experiencing a catastrophic crash again is not high unless a larger-scale risk-off event occurs, such as a stock market crash or entering a bear market. Under the basic scenario, Compass Point expects Bitcoin’s bottom range to be between $60,000 and $68,000. Why this range? The analysts explain that this is the zone where long-term holders (investors holding coins for more than 6 months) have shown strong buying interest in past cycles. Data indicates that about 7% of the Bitcoin held by long-term investors was purchased within this price range. “We see very strong support within this range,” the two analysts wrote in the report, “Our baseline and testing suggest Bitcoin will bottom around $65,000.” Bitcoin’s recent decline has accelerated, dropping below $81,000 over the weekend and reaching a low of $74,532. Compass Point pointed out that $81,000 is not only a psychological barrier but also the “average cost line” for many Bitcoin spot ETF investors and market participants. Once broken, selling pressure naturally increases. The report states that since January 15, Bitcoin ETFs have experienced a net outflow of $3 billion. Currently, over 50% of ETF assets are in unrealized losses. Analysts believe that when the $81,000 to $83,000 range acts as resistance, capital outflows may further intensify. Analysts also pointed out that the $70,000 to $80,000 range contains a structural weakness, akin to an “Air Pocket,” meaning support is extremely thin. “Long-term holders have less than 1% of their positions built in this range,” the analysts warned. In other words, this price zone lacks structural buying support, and once selling pressure emerges, the price could slide down quickly like a slide, heading straight for the $60,000 support line. What if the defenses at $60,000 to $68,000 are also breached? Compass Point indicated that the next support level would retreat to $55,000 — the average cost basis for all historical buyers. However, analysts emphasized that a collapse through this final line of defense would require a “catastrophic” catalyst. “Looking back at past bear markets, Bitcoin usually only falls below its historical average cost during extreme circumstances,” the report states, “For example, the 2022 bear market was driven by a double whammy of a US stock market bear and a series of collapses in the crypto industry.”