The cryptocurrency market has experienced a tumultuous weekend, leaving many investors unsettled. However, a glimmer of optimism emerges from U.S. investment bank Compass Point, which suggests that the current crypto bear market might be nearing its conclusion.
Bitcoin’s Bottom in Sight? Compass Point Predicts $60K-$68K Floor
In a report released on Monday, Compass Point analysts Ed Engel and Michael Donovan offered a cautious yet hopeful outlook. While acknowledging the prevailing short-term bearish sentiment in the crypto market, they contend that the likelihood of Bitcoin suffering another devastating crash is low, absent a major risk-off event like a collapse in the U.S. stock market leading to a broader bear market.
Under their base-case scenario, Compass Point anticipates that Bitcoin’s bottom will firmly establish itself within the $60,000 to $68,000 range.
Why This Crucial Price Range?
The analysts’ confidence in this specific range stems from historical data patterns. They explain that this zone has consistently represented a strong buying interest area for “long-term holders”—investors who have held their Bitcoin for over six months. Current data reinforces this, showing that approximately 7% of all Bitcoin currently held by these steadfast investors was acquired within this very price band.
“We see very strong support in this range,” Engel and Donovan stated in their report. “Our base case and testing suggest Bitcoin will bottom out around $65,000.”
Navigating Recent Volatility: $81,000 Breached, ETF Outflows Intensify
Bitcoin’s recent price action has been sharp, with the asset dipping below $81,000 over the weekend to a low of $74,532. Compass Point highlights that the $81,000 mark was more than just a psychological barrier; it represented the “average cost line” for a significant portion of Bitcoin spot ETF investors and broader market participants. Its breach naturally triggered increased selling pressure.
The report further reveals that Bitcoin ETFs have recorded a net outflow of $3 billion since January 15, with over 50% of current ETF positions now facing unrealized losses. Analysts warn that if the $81,000 to $83,000 range transforms into a sustained resistance level, these capital outflows could accelerate.
The “Air Pocket” Warning: Weak Support Between $70,000 and $80,000
A critical observation from the analysts points to a significant structural weakness in the $70,000 to $80,000 price range, which they liken to an “air pocket.” This term signifies a void where structural support is remarkably thin.
“Less than 1% of holdings by long-term holders were established in this range,” the analysts cautioned. This lack of substantial long-term holder accumulation means that should selling pressure intensify, Bitcoin’s price could slide rapidly through this zone, potentially heading directly towards the $60,000 defense line.
The Last Line of Defense: $55,000 Requires “Catastrophic” Catalysts
What if even the robust $60,000 to $68,000 defense line fails to hold? Compass Point indicates that the next significant support would fall back to $55,000—a crucial level representing the average cost price for all historical Bitcoin buyers. However, the analysts strongly emphasize that breaching this ultimate defense line would necessitate a “catastrophic” catalyst.
“Looking back at past bear markets, Bitcoin typically only falls below its historical average cost under extreme circumstances,” the report notes. As an example, they cite the 2022 bear market, which was a “double whammy” of a U.S. stock market downturn coupled with a series of major collapses within the crypto industry itself.
In essence, unless the broader macroeconomic environment deteriorates sharply and unexpectedly, the $55,000 level is considered an extremely difficult abyss for Bitcoin to reach.
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