Bitcoin has dropped approximately 6% since revisiting its 200-day moving average near $83,000 earlier this month, according to reports from The Block. The cryptocurrency recently surpassed $82,000 but failed to break above the key technical indicator, fueling speculation that the bottom may not have been reached yet. As of the latest reporting, Bitcoin traded near $76,700.86, showing the recovery has not fully repaired market confidence. Despite this recent rejection, analysts at research and brokerage firm K33 maintain that February's bottom of around $60,000 still marks this cycle's maximum drawdown, with the firm's base scenario expecting this to be the cycle's bottom. The $83,000 area now functions as a ceiling rather than a floor, with history showing that when key moving averages resist multiple assaults, the path of least resistance often shifts lower. Recent market data shows Bitcoin fell for five consecutive days after failing to break through the 200-day EMA, nearly dropping below $76,000. The US spot Bitcoin ETF lost nearly $1 billion in just two trading days as soaring US Treasury yields and a strong dollar put significant pressure on risk assets.
K33 Head of Research Vetle Lunde noted in a new report that the current pattern differs significantly from previous bear market cycles. As reported by The Block, bitcoin spent 189 days between the November 200-day moving average breakdown and this month's retest, far longer than the 96, 132, and 85 days seen in 2014, 2018, and 2022 respectively. Bitcoin remains more than 20% down during this period compared to positive returns in 2014 and 2022, and a shallower drawdown of around 8% in 2018. The 200-day moving average trended higher in those years but is currently trending lower in 2026. Lunde wrote that the market still lacks the heavy leverage build-up that often appears before a deeper sell-off, distinguishing this cycle from previous bear market patterns. From a cyclical perspective, the study concluded that this model more closely resembles moderate bull market conditions in March-April 2025 than a short-term bear market recovery. The less aggressive bull market of 2025 sets the stage for a more moderate bear market in 2026, with the firm's base scenario maintaining that $60,000 in February marks the maximum decline, the bottom, of this cycle. Market analysts suggest the reasonable pullback range is between $78,000 and $66,000, with a second pullback making the structure more resilient.
K33 highlighted derivatives data pointing to uniquely pessimistic sentiment, with the firm's framework tracking closer similarities to strong periods such as March and April 2025 than to past bear market rallies. As reported by The Block, Lunde wrote that past rallies recovered quickly, rebuilding risk appetite and leverage and setting up the unwind that fueled the next leg lower, but the current slow grind has not. The firm's latest analysis reveals that Bitcoin's 30-day average funding rate has remained negative for 81 consecutive days, nearing a record streak and showing traders have consistently leaned bearish even as prices rebounded from February lows. Annualised basis on CME bitcoin futures recently fell below 2.5%, levels historically associated with periods of extreme caution, while open interest across bitcoin derivatives remains elevated. This stands in stark contrast to prior bear markets, where aggressive rallies back toward the 200-day MA were fueled by rapidly rebuilding leverage that eventually collapsed. The negative funding rate creates a coiled spring risk - if sentiment shifts and funding flips positive, the market could experience a violent short squeeze that rapidly rebuilds leverage. Recent market data shows the options market exhibited an unusually high implied volatility of 6%, prompting Goldman Sachs analyst Peter Callahan to warn that the technical indicators have issued the most extreme warning since 1999. Despite this pessimism, analysts note that major funds are actively accumulating at key support levels, with expectations of macro-level monetary easing ultimately pushing up Bitcoin prices.
According to K33's analysis, institutional participants reduced their BTC exposure by 26,733 BTC following the latest 13F disclosures, while retail participants increased holdings by 19,395 BTC. Delta-neutral firms such as Millennium and Jane Street accounted for most of the reduced institutional exposure, likely caused by compressing crypto yields, substantial volatility, and opportunities in alternative commodity markets following Iran escalations. Recent market updates show U.S. spot Bitcoin ETFs recorded more than $1.6 billion in cumulative weekly outflows as Bitcoin fell below $77,000, with the products posting $648.6 million in net outflows - the largest single-day withdrawal since January 29. BlackRock's IBIT accounted for $448.3 million of these outflows, highlighting defensive positioning as Bitcoin trades near average spot ETF cost basis. The Bitcoin ETF lost nearly $1 billion in just two trading days as soaring US Treasury yields and a strong dollar put significant pressure on risk assets. The key difference this cycle is that Bitcoin has held above $60,000 despite this selling pressure, with the $60,000 level acting as a floor rather than a stepping stone to lower lows. This contrasts with previous bear markets where similar outflows triggered cascading liquidations, as the current elevated open interest hasn't been accompanied by the aggressive leverage rebuilding that typically precedes a crash.
Despite K33's constructively bullish view for 2026, several risk factors could challenge the current market setup. The Fed's 74% probability of two rate cuts by year-end could disappoint markets, contrasting sharply with the tightening cycles of 2018 and 2022 that crushed Bitcoin. Macro tailwinds are priced in but not guaranteed, with regulatory uncertainties around the CLARITY Act or strategic bitcoin reserve details remaining. U.S. ETF outflows accelerated to $1.6 billion in five days as prices softened near the $83,000 area, representing a classic distribution pattern where holders sell into strength. If institutional investors interpret the 200-day MA rejection as a signal to reduce exposure, the resulting flow pressure could overwhelm fundamental tailwinds. However, K33's bottom line remains optimistic: "Bitcoin will outperform equity indices and gold in 2026" as the fundamental tailwinds are real, though the market hasn't priced them in yet. The firm estimates that 401(k) access to crypto could unlock roughly $87 billion if just 1% of retirement balances allocate to Bitcoin, combined with supportive guidance from major wealth managers and expanding institutional infrastructure under the Trump administration. Recent market data shows the probability of a 25 basis point rate hike by the Federal Reserve in December has risen to 41.7%, while the probability of a rate hike in 2026 has surged to over 80%. April's CPI unexpectedly rebounded to 3.8% year-on-year, with real wages experiencing negative growth for the first time in three years, completely shattering market expectations for interest rate cuts.
