Bitcoin Could Fall Another 20% as On-Chain Data Points to Deeper Correction, Analysts Warn

Bitcoin may be facing further downside pressure, with Bitwise analyst André Dragosch warning that the leading cryptocurrency could drop by an additional 20% from current levels. In an interview with The Block, Dragosch outlined key support zones that could determine whether the market stabilizes or slides further.

Key Support Levels Under Watch

Dragosch, head of research for Europe at Bitwise, identified the 200-week moving average of $61,000 as the first major support level. If that fails to hold, the next line of defense sits at the on-chain realized price of $56,000. A breakdown below those levels could send Bitcoin to the long-term holder cost basis of approximately $48,000.

While Bitwise’s proprietary “bottom-cycle probability model” showed signs of activation last week, Dragosch noted that several on-chain indicators have not yet reached the extremes seen at previous market bottoms. This suggests that the correction may not be over, even if sentiment is turning bearish.

ETF Selling Pressure and Market Dynamics

Dragosch pointed to recent selling pressure from exchange-traded funds (ETFs) as a significant factor weighing on Bitcoin’s price. He estimated that ETF outflows have created a selling effect equivalent to roughly 50,000 BTC being liquidated in the market. This institutional selling has added to the downward momentum, compounding concerns among retail and long-term holders.

Alex Thorn, head of research at Galaxy Digital, echoed a similarly cautious outlook. Thorn predicted that Bitcoin will form a bottom in the fourth quarter of this year, trading in the $40,000 to $46,000 range. He noted that only four of 13 historical bottom signals have appeared so far, suggesting that the market has not yet reached a capitulation phase.

What This Means for Investors

The projections from Bitwise and Galaxy Digital highlight a growing consensus among analysts that Bitcoin’s correction may have further to run. For investors, the key takeaway is that short-term price action could remain volatile, with significant support levels at $61,000, $56,000, and $48,000. A break below the $48,000 level would mark a severe drawdown from recent highs and could signal a deeper bear cycle.

However, the activation of Bitwise’s bottom-cycle probability model also suggests that the market may be approaching a long-term buying opportunity, even if the exact bottom remains elusive. Historically, similar patterns have preceded major recoveries.

Conclusion

Bitcoin faces a critical test in the coming weeks and months. With ETF-driven selling pressure and on-chain indicators still flashing caution, analysts at Bitwise and Galaxy Digital advise preparing for further downside before a potential bottom forms later this year. Investors should monitor the $61,000 and $56,000 levels closely, as they will likely determine the market’s next major direction.

FAQs

Q1: What is the 200-week moving average and why is it important for Bitcoin?
The 200-week moving average is a long-term trend indicator calculated by averaging Bitcoin’s price over the past 200 weeks. It has historically acted as strong support during bear markets and is closely watched by analysts to gauge the health of the overall trend.

Q2: What is the realized price in on-chain analysis?
The realized price is the average acquisition cost of all Bitcoin based on the price at which each coin last moved on the blockchain. It is considered a more accurate measure of market support than simple price averages because it reflects actual holder behavior.

Q3: How do ETF outflows affect Bitcoin’s price?
ETF outflows represent institutional investors selling their Bitcoin holdings through exchange-traded funds. Large outflows can create significant selling pressure, driving prices lower, especially when combined with retail selling and broader market uncertainty.