Bitcoin The violent sell-off earlier this month may be ushering in a final phase of the bear market, but investors should not expect a quick recovery, according to Vetle Lunde, head of research at K33.
“Current conditions closely resemble late September and mid-November 2022, periods near the bottom of the bear market that were followed by extended consolidation,” he wrote.
At the time, bitcoin was languishing between $15,000 and $20,000, about 70% below its 2021 peak.
Now, bitcoin has settled into a calmer range between $65,000 and $70,000, and K33 Research’s regime model (which combines derivatives data, ETF flows, technical signals, and macro signals) suggests the market is approaching a cyclical bottom.
The silent routine
One of the signs of the quiet period of consolidation is that trading activity has fallen sharply, with speculative excess completely eliminated.
Spot volumes fell 59% week over week, according to the K33 report. Meanwhile, perpetual futures open interest fell to a four-month low and funding rates remained negative across the board.
That kind of cooling period is typical after sharp sell-off cascades, as market participants digest losses and reset positioning, Lunde said.
Meanwhile, US-listed bitcoin ETFs have seen a record decline in exposure of 103,113 BTC since the beginning of October. Still, Lunde noted that since BTC has retraced almost 50%, more than 90% of the maximum exposure in bitcoin terms remains.
Sentiment indicators also paint a gloomy picture, with the “Crypto Fear and Greed” index falling to a record low of 5 last week and languishing below 10 for most of last week.
Long-term value area
What does all this mean? Bitcoin is “probably near or at a global bottom, but a prolonged consolidation is expected between $60,000 and $75,000,” according to Lunde. Similar historical regimes have yielded moderate results
Still, for investors with a long-term view, current levels are attractive for accumulation, although patience may be necessary, he argued.
James Check, onchain analyst and co-founder of Checkonchain, also noted that bitcoin’s sideways periods are an opportunity to position itself.
He said bitcoin, most of the time, “does nothing” and then tends to move in strong bursts of appreciation rather than consistent trends. Those explosive phases are often concentrated in a few trading days, often at the beginning of a bull cycle and again towards the later stages.
“It doesn’t do anything most of the time, and then sometimes it goes up 100% in a quarter, and if you’re not there during that quarter, you miss the whole period.”
He warned investors not to try to time the highs and lows perfectly, as they often miss the initial rise.
In other words, a prolonged consolidation can be frustrating, but historically the market has rewarded patient positioning rather than getting the timing right.
