As the bearish momentum intensifies for BTC, many are wondering how far it might fall. A range between $55,000 and $40,000, corresponding to a potential decline of –56% to –68% from the October 2025 ATH, has caught our attention.
Bitcoin is dead, long live Bitcoin!
The BTC price has plunged below the $85,000 support level, confirming the “dead cat bounce” scenario we feared in our previous analyses.
The risk of a prolonged bearish trend taking hold in 2026 is now very high, as the market enters an advanced phase of its bear market.
In this context, what price levels could act as a floor for this new bear cycle? How low could BTC fall? On-chain data provides some answers.
Figure 1: Daily BTC Price
Shifting Market Conditions
To better understand the current market situation, let’s assess BTC’s long-term position. To do so, we’ll continue tracking the percentage of the supply in profit, as well as its four-year and cumulative averages.
This metric measures the profitability of the circulating supply to estimate whether the market is in an overbought, oversold, or balanced zone. The four-year and cumulative averages serve as reference thresholds to distinguish between bullish and bearish market conditions.
The correction at the end of 2025 caused this indicator to fall below both of these levels, estimated at around 75%. Historically, the BTC market exits bull market conditions when fewer than three out of four bitcoins are held at a profit. The rejection of this threshold in the following weeks thus reinforced the credibility of the dead cat bounce scenario.
More recently, the indicator has fallen below its lower statistical thresholds (in green), marking the onset of deteriorating market conditions, where declining profitability is gradually pushing investors to capitulate. This type of phase often corresponds to the emergence of the best long-term buying opportunities.
Figure 2: Percentage of BTC supply in profit
When applying this same analytical framework to the MVRV ratio, which estimates the average unrealized profitability of BTC in circulation, the picture looks slightly different.
Although a break below its averages occurred in mid-January, the indicator has not yet reached its statistical lows. Historically, these levels are typically reached during the terminal phase of a bear market cycle, which could still take several months.
In summary, while the BTC market does appear to be entering a bear market phase following the 2023–2025 bull cycle, it is still premature to assert that the downturn is over.
Figure 3: BTC MVRV Ratio
Finally, as with the percentage of the supply in profit, BTC’s SOPR has fallen below its statistical lows (in green), indicating that significant loss-taking was triggered by the recent loss of the $85,000 support level. It appears that a local capitulation occurred over the past week, as investors took the hit by liquidating their holdings.
However, the magnitude of realized losses remains limited compared to the extreme capitulation observed during the final stages of previous bear markets (December 2018 and November 2022). This suggests that significant buying opportunities could still emerge in the coming weeks or months.
Figure 4: BTC SOPR
The BTC Momentum Oscillator aggregates data on supply profitability, investor behavior, and profit/loss taking to produce a composite signal.
It is currently showing bearish statistical signals, indicating a deteriorating environment where corrections are gradually causing investors to capitulate. However, the bearish momentum has not yet peaked, as the market’s average breakeven point remains at lower levels.
Figure 5: BTC Momentum Oscillator
Opportunity Zones
After failing to break through its on-chain resistance levels, BTC is entering the advanced phase of its bear cycle. Historically, this type of pattern has led to price movements toward two key thresholds:
- the realized price, corresponding to the average cost basis of BTC in circulation;
- the equilibrium price, which weights this latent profitability by the age of the supply.
In previous cycles, bearish peaks were reached below these two levels, during a final capitulation leading to a gradual exhaustion of selling pressure. These thresholds currently lie in a range between $55,000 and $40,000, corresponding to a potential decline of –56% to –68% from the October 2025 ATH.
Figure 6: Realized Price, All-Time Highs, Fair Value, and Equilibrium Price of BTC
By combining the realized price and its short- and long-term variants, it is possible to identify the typical stages in the formation of a bear market bottom:
- the BTC price falls below all of its realized prices, indicating widespread pressure across all investor cohorts;
- the realized price of short-term investors falls below that of long-term investors, signaling that new entrants are buying at a lower price than more seasoned players;
- the spot price rises back above the realized price, allowing short-term profitability to support a new growth cycle.
A window of opportunity lasting a few weeks typically forms when stages 1 and 2 overlap. It describes a gradual return to equilibrium following the final capitulation.
At this stage, the BTC market is still far from these conditions, which could take several months to materialize. Given that previous bear cycles lasted an average of one year, this phase could emerge starting in October 2026.
Figure 7: Average realized price of LTHs and STHs for BTC
Summary of this on-chain analysis of Bitcoin (BTC)
BTC confirms its dead cat bounce scenario and is moving toward the advanced phase of its bear cycle, following the 2023–2025 bull market. This dynamic marks the onset of deteriorating market conditions, where declining returns are gradually pushing investors to capitulate.
However, the magnitude of recent realized losses remains limited compared to those observed during the final stages of previous bear markets (December 2018 and December 2022).
This suggests that significant buying opportunities could still emerge in the coming weeks and months.
Historically, bear market troughs have been reached below the realized price and the equilibrium price—levels at which a final capitulation occurs, accompanied by a gradual exhaustion of selling pressure. These thresholds currently lie in a range between $55,000 and $40,000, corresponding to a potential decline of –56% to –68% from the October 2025 ATH.
