Alex Thorn pointed out a significant gap in the on-chain supply between $82,000 and $70,000, noting that limited buying there makes it more likely that demand will be tested again.
- Galaxy’s research head, Alex Thorn, cautioned that Bitcoin’s recent decline is not short-term noise.
- With a 15% decline between Wednesday and Saturday and over $2 billion in long liquidations, Bitcoin’s price is well below its ETF cost bases.
- Thorn said Bitcoin is already down 38% from its all-time high and that its 40% declines have historically extended to 50% or more, implying a potential downside to $63,000.
As Bitcoin saw a 2024-level price dip, Alex Thorn, the Head of Firmwide Research at Galaxy Digital (GLXY), has warned that the latest sell-off should not be considered as short-term noise on Monday.
According to a research note by Galaxy Digital, the market is being driven toward lower prices and longer-term support levels by a combination of on-chain weakness, broken technical levels, macro uncertainty, and a lack of short-term catalysts.
He also added that the selling pressure increased throughout the weekend, causing the apex cryptocurrency to drop 15% between Wednesday, January 28, and Saturday, January 31.
A 10% decline on Saturday alone resulted in over $2 billion in long liquidations across futures markets. BTCUSD briefly fell 10% below the average cost basis of U.S. spot Bitcoin ETFs, estimated at around $84,000, during the sell-off, trading as low as $75,644. Prices occasionally fell below Strategy’s average cost basis of $76,037, resulting in a paper loss of almost $1 billion.
Bitcoin Historical Pattern Signals Risk Of More Drawdown
According to Thorn, 46% of the circulating supply of Bitcoin is currently held at a loss, and the cryptocurrency nearly reached its one-year low of $74,420, set during the April 2025 “Tariff Tantrum.” Additionally, he highlighted a noteworthy technical signal that has flashed for the first time since 2018. Bitcoin ended January with four consecutive red monthly candles.
Bitcoin has only tanked once, except in 2017, when it fell about 40% from its all-time high. In the past, these drawdowns have often been severe, with price drops of 50% or more over three months.
Thorn suggested that if Bitcoin dropped 50% from its most recent peak, it would land in the $63,000 range, in line with historical patterns. With Bitcoin trading at around $77,000, Thorn notes that it is already 38% below its all-time high of $126,296. This was the first time since early 2024 that it had fallen below the previous cycle peak.
He also pointed out a huge “supply gap” on-chain between the ranges $82,000 and $70,000, where relatively few coins last changed hands. Thorn claimed that, because there has been a lack of buying in that range, it’s more likely that Bitcoin will decline in the near future to gauge demand at those levels.
Bitcoin Could Go As Low As $58K
He identified $70,000 as a reasonable short-term downside target for now, with greater risk to longer-term support levels, including the realized price of around $56,000 and the 200-week moving average (MA) of around $58,000. Thorn indicated that Bitcoin fell below its 50-week moving average in November of last year. In past bull markets, similar breaks have led prices back toward the 200-week MA.
Bitcoin (BTC) was trading at $78,303.25, up 3.4% in the last 24 hours. On Stocktwits, retail sentiment around Bitcoin improved from ‘extremely bearish’ to ‘bearish’ territory. However, chatter remained at ‘extremely high’ levels over the past day.
Bitcoin’s ‘Debasement’ Narrative Is Dead
Thorn also claimed that even though selling pressure has eased a bit, there is still little evidence of whales or long-term holders accumulating more, even though long-term holders have started to slow down their profit-taking. He also said that Bitcoin’s failure to trade like gold and silver has made its story as a macro “debasement hedge” less convincing.
Thorn noted that Bitcoin is currently 7.3% below its ETF cost basis, after falling as much as 10% on January 31, and that the past two weeks have been the second- and third-worst on record for Bitcoin ETFs.
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