Bitcoin Price Analysis: Market Signals and Bear Market Status

Bitcoin is currently exhibiting a rare weekly bullish divergence, a technical pattern that has historically preceded significant price rallies [1]. While this signal suggests that selling pressure may be weakening, analysts remain divided on whether the current market cycle has reached a definitive bottom [1, 3].

Key takeaways

• Bitcoin’s second weekly bullish divergence on record is hinting at a potential rally toward $90,000 [1].
• Realized losses in the current market have reached $174 billion, trailing the $211 billion record set in 2022 [2].
• Bitcoin’s realized price, or average cost basis, sits near $53,600, a level that has historically served as a structural bottom [3].
• Spot Bitcoin ETFs have seen over $4.8 billion in total outflows since mid-May, signaling a contraction in demand [3].
• Retail investor conviction remains high, which some analysts argue prevents the total capitulation typically required for a major market bottom [2].

Technical Signals Versus Market Demand

The current bullish divergence occurs as Bitcoin’s price continues to weaken while its relative strength index (RSI) forms a higher low, indicating that momentum is improving despite the downward price trend [1]. Historically, this setup appeared following the FTX crash in 2022, preceding a 715% rally [1]. Furthermore, Bitcoin is holding near its 200-week simple moving average (SMA) of approximately $62,000, a level that acted as a bottom zone during the 2015, 2018, and 2020 bear markets [1]. Analyst Michael van de Poppë suggests that if Bitcoin breaks above the $64,000–$65,000 range, it could see further gains toward $73,000 or even $79,000 [1].

However, other indicators suggest the market may face further downside. CryptoQuant reports that demand is fading, noting the most severe single-week demand destruction since January 2022 [3]. While Bitcoin has fallen 51% from its all-time high of $126,080, the lack of total investor capitulation—evidenced by realized losses that have yet to surpass 2022 levels—suggests the market could "purge further" [2, 3]. Retail investors continue to buy dips, while institutional participants have been selling into these relief bounces, a dynamic that contradicts the typical formation of major market bottoms [2].

Why it matters

The debate over whether the bear market is over centers on the tension between historical technical patterns and current on-chain data. While the bullish divergence provides a potential roadmap for recovery, the structural contraction in spot demand and the ongoing outflows from Bitcoin ETFs indicate that a durable price recovery may require more time [1, 3]. Analysts suggest that for a sustainable bottom to form, realized losses may need to accelerate to clear the current supply overhang [3]. Until the market sees a shift in the current retail-versus-institutional trading dynamic, the possibility of the price testing lower levels, such as the $50,000 bear flag target, remains a focus for market observers [1, 2].