On-chain analysis suggests Bitcoin may be nearing the end of its bear market but could still face one final significant price decline. Several indicators, including a long-term sentiment index, point to a potential downside target around $54,000, aligning with Bitcoin’s realized price. However, sustained institutional buying activity has provided counterbalance, potentially limiting further losses.
Bitcoin is displaying signs typical of the late stages of a bear market. Joao Wedson, founder of on-chain analytics platform Alphractal, noted that one sentiment indicator suggests a final large drop could still occur before recovery.
In a Tuesday post, Wedson stated that Bitcoin’s 720-day Tactical Bull-Bear Sentiment Index had dropped into an extreme bearish zone. Historically, such readings have reflected “late-stage fear” among traders, a phase that can precede a final shakeout.
Historical precedent shows similar setups led to significant declines in 2018 and 2022. Wedson warned Bitcoin could still face “a sharp move like a -$15K shakeout” over the next six months, implying a roughly 20% decline toward $54,000.
This implied target aligns with earlier downside calls citing external factors like war-led inflation. The $54,000 level also nearly coincides with Bitcoin’s realized price on Glassnode’s MVRV Extreme Deviation Pricing Bands, a key on-chain cost-basis metric.
More bearish forecasts have also surfaced, with some analysts warning Bitcoin could eventually slide to as low as $10,000. However, Strategy’s aggressive Bitcoin purchases in recent weeks have helped absorb selling pressure and limit downside.
If the firm continues its buying spree, Bitcoin could reverse sharply and climb back toward $100,000 or higher. The market now presents conflicting signals between traditional on-chain metrics and substantial institutional demand.
