Don’t Fall For The Bitcoin Trap: Analyst Explains Why Recovery To $76,000 Is Not A Good Thing

Overview

Bitcoin is currently facing significant bearish corrections, struggling to maintain prices above $70,000. Analysts are divided on its future direction, with some viewing the current price action as a potential base for recovery, while others caution against the risks of a rally.

Current Market Situation

Bitcoin’s price has been hovering in a narrow range below $70,000, repeatedly failing to close daily trading sessions above this level. This stagnation has led to uncertainty among crypto analysts regarding the cryptocurrency’s next move. Some analysts speculate that the current structure could serve as a foundation for another upward push. However, there are notable concerns that any bounce back could be met with fresh selling pressure.

One of the more cautious analysts, Sherlock, has articulated his views about the potential implications of a price increase to between $72,000 and $76,000. He believes that such a rally may not signify recovery for Bitcoin but could instead represent a “kill zone” for Bitcoin bulls. The rationale behind this perspective is tied to the Bitcoin holdings of Strategy, a significant market player.

The Breakeven Wall

As it stands, Strategy holds 714,644 BTC, which constitutes approximately 3.4% of the total Bitcoin supply. The average cost basis for this holding is $76,052, indicating that the company is currently facing substantial unrealized losses. At the current trading price of around $68,000, Strategy is estimated to be down by approximately $5.7 billion. Sherlock posits that any upward movement towards the $74,000 to $76,000 range brings this considerable amount of supply closer to breakeven.

Breakeven levels typically act as selling zones, which could lead to increased selling pressure if Bitcoin approaches this price range. The $76,000 level is particularly significant as it aligns with Strategy’s average entry price. Although there is no indication that Strategy intends to sell its Bitcoin holdings, the proximity to breakeven could tempt other large holders to reduce their exposure.

ETF Pressure and Cost Basis

Sherlock has also highlighted the impact of Spot Bitcoin ETFs on the market dynamics. Currently, approximately 1.28 million BTC is held in these funds, with an average entry price estimated between $84,000 and $90,000. Since late 2025, these ETFs have experienced over $6 billion in net outflows, suggesting that the Bitcoin price may continue to face pressure even if it reaches the average entry price.

Additionally, around 63% of the invested Bitcoin wealth carries a cost basis above $88,000. This means a significant portion of buyers from 2025 are currently at a loss, and a rally to their entry levels could also create a bull trap. Sherlock warns that if Bitcoin climbs into the $72,000 to $76,000 range, it may trigger selling pressure from these investors. If this level does not hold, the next potential trap could emerge around $88,000.

From author

The current state of Bitcoin reflects the complexities of market dynamics and investor psychology. With significant holders like Strategy potentially influencing price movements, the interplay between breakeven points and selling pressure is a critical factor to consider. The cautious stance of analysts serves as a reminder of the inherent volatility in the cryptocurrency market.

Impact on the crypto market

• Bitcoin’s inability to maintain prices above $70,000 contributes to market uncertainty and volatility.
• The potential for large holders to sell at breakeven levels could exacerbate downward pressure on Bitcoin’s price.
• Spot Bitcoin ETFs may influence market dynamics, particularly as they face significant net outflows.
• A rally to the $72,000 to $76,000 range could create a bull trap, further complicating recovery efforts.
• Overall market sentiment remains cautious, with analysts closely monitoring price movements and large holder behaviors.