According to Galaxy, Bitcoin’s plunge in late January led to $2 billion in liquidations, cutting off key support and leaving nearly half of the supply underwater.
Bitcoin (BTC) has been trying to recover above $78,000 after suffering devastating losses over the weekend, but the bears gained the upper hand and pushed the price lower. Alex Thorne, head of research at Galaxy Digital, said recent on-chain data and market structure suggest continued downside risk for BTC.
Researchers cite weak momentum, macroeconomic uncertainty and lack of catalysts, suggesting more pain rather than relief.
Steady downward trend
In his latest research note, Thorne pointed to the sharp decline late last month, during which Bitcoin fell 15% from January 28 to 31, but the decline accelerated over the weekend. A drop of about 10% on Saturday alone triggered the largest liquidation event on record. More than $2 billion of long positions were liquidated across futures trading venues.
During this move, BTC fell to $75,644 on Coinbase, 10% below the average cost basis of the US Spot Bitcoin ETF, estimated at about $84,000. The crypto asset briefly traded below the average cost basis of $76,037 reported by Strategies, approaching the one-year low of $74,420 hit during the April 2025 “tariff tantrum.”
Thorne said that 46% of Bitcoin’s circulating supply is currently underwater, which means these coins last moved on-chain at high prices, and that Bitcoin’s January closing price marked the first time since 2018 that it marked four straight monthly red candles. With the exception of 2017, the asset has never experienced a drawdown of about 40% from its all-time high without falling more than 50% within three years, according to the memo. A few months. This means the price is closer to $63,000 based on the current cycle.
Galaxy researchers also noted a large gap in on-chain ownership between roughly $82,000 and $70,000, indicating limited demand in that range and raising the possibility of further testing.
According to the analysis, Bitcoin’s realized price is around $56,000 and its 200-week moving average is around $58,000, and as long as the spot price remains above that level, that level will rise gradually.
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The note said profit-taking among long-term holders has begun to ease, but there is little evidence of significant accumulation by whales or long-term holders. Thorne outlined that while it remains difficult to identify potential catalysts, there are theories that this could be negative for Bitcoin as it has not been able to trade in lockstep with precious metals such as gold and silver amidst heightened macro and geopolitical uncertainty.
Passage of the U.S. Cryptocurrency Market Structure Act, known as the CLARITY Act, could act as an external catalyst, but the likelihood of its passage has declined in recent weeks and any positive impact could benefit altcoins more than Bitcoin, Galaxy said.
These factors combine to make Bitcoin more likely to move towards the lower bound of the $70,000 range, potentially testing the realized price and the 200-week moving average in the low $50,000 range over the coming weeks and months. Interestingly, these levels historically represent cycle bottoms and strong long-term entry points.
BTC’s bottom may be even deeper
Crypto analyst Dr. Profit recently downgraded his expectations for a BTC cycle bottom following the price decline. He said the decline and loss of key technical support levels changed the market outlook.
As a result, he revised his bottom estimate to a lower range of $54,000 to $44,000, up from his previous estimate of $50,000 to $60,000.
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