A new major wave of debate about Bitcoin’s potential decline erupted after a number of analysts began publishing forecasts of a possible drop to $35,000. Such a scenario would mean a correction of about 72 percent, reminiscent of the depth of previous cycles.
However, some analysts argue that the market is moving differently this time, and the technical picture does not confirm such a deep collapse.
An analyst under the pseudonym Sykodelic stated earlier this week that the idea of a drop to 35 thousand is ‘absolute garbage’ and that the minimum pain zone in the current cycle is around $55,000. According to him, the market structure does not contain the signs of ‘deep expansion’ that usually precede destructive price breakdowns.
According to Lookonchain, Bitcoin is currently down about 31 percent from the October high of $126,000. For a bull cycle, this is quite a typical correction range, especially with increased volatility after historical highs.
Technical signals contradict forecasts of a drop to 35 thousand
Sykodelic explains that deep breakdowns — up to minus 75 percent — occurred only after extreme phases of ‘overheating’, when the Relative Strength Index (RSI) recorded abnormally high values.
According to him, the current cycle is characterized by minimal expansion over many years, and the RSI level does not hide this. Consequently, there is no fundamental basis for a deep multi-month capitulation.
Bitcoin is currently holding the middle Bollinger Band on the monthly chart.
An additional argument from the analyst is related to the behavior of the Bollinger Bands on the monthly chart. Throughout Bitcoin’s existence, the price has never closed below the lower Bollinger Band on the monthly timeframe. Even during periods of severe shocks, including the 2017 peak and the 2022 crash, the price remained above this basic boundary.
That is why Sykodelic is convinced that even in the most negative scenario, the lower limit of the cycle is around $55,000.
Market colleagues also do not expect a deep collapse
CoinEx exchange’s chief analyst Jeff Ko stated that even a drop to $55,000 seems unlikely. In his assessment, the bleakest scenario for the coming months is a decline to 65–68 thousand, but he believes that the structure of the traditional four-year cycle has already changed.
Institutional capital, the influence of exchange-traded funds, and a noticeable increase in market liquidity make a repeat of old patterns, such as a 70–80 percent collapse, less realistic.
He noted that the presence of large asset managers provides the market with ‘a deeper demand cushion’, making future corrections shallower compared to previous cycles.
Nevertheless, risks remain
There are also more cautious assessments among analysts. SignalPlus head of analytics Augustin Fan considers the 72–75 thousand dollar range to be a critical zone. If this area is broken downward, he expects ‘a cascade of stop-loss triggers’ and increased pressure.
According to him, this could lead to a chain of liquidations among strategies with high leverage, making it difficult to predict the depth of the decline at the moment.
Such concerns are related to the fact that most of the new strategies that have appeared on the market in the past two years use derivatives and high leverage. Therefore, if important support levels do not hold, the market may face a sharp and poorly controlled move.
At the time of publication, Bitcoin is trading around 90,000 and is gradually recovering after a short-term drop to 84,000 earlier in the week. Despite increased volatility, the structure of the above technical indicators remains within the framework of a bull market.
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