Is The Bitcoin Bottom In? Leading On-Chain Analyst Sees A Floor Forming

Overview

Bitcoin has experienced a significant drawdown, dropping into the low-$60,000s, prompting traders to search for a potential bottom. An influential on-chain analyst has suggested that the current market conditions may indicate a shift in risk-reward dynamics, though he emphasizes that determining a definitive bottom is an ongoing process.

Current Market Analysis

James “Checkmate” Check, a prominent on-chain analyst and author of Check On Chain, discussed the recent market movements during an interview. He highlighted that as Bitcoin entered the $60,000 range, it reached what he termed “deep value” territory across various mean-reversion frameworks. This observation coincided with a spike in capitulation-style losses, reminiscent of levels seen during the lows of the 2022 cycle.

Check’s perspective is that if Bitcoin were to trend towards zero, traditional models and frameworks would lose their relevance. However, if Bitcoin maintains its value, the current statistical setup appears increasingly favorable following the recent selloff. He emphasized the importance of paying attention to market dynamics at this juncture.

Check also noted that his conclusion regarding the market’s potential bottom is probabilistic rather than definitive. He increased the odds of having established a bottom to over 50%, suggesting a probability of around 60%. Conversely, he estimated the chances of reaching a new all-time high in 2026 to be between 15% and 20%, contingent upon significant macroeconomic events.

In examining the exchange-traded funds (ETFs), Check pointed out that approximately $7.5 billion had exited the market during the recent downturn. He argued that this situation appears more like a positioning unwind rather than a structural failure. He referenced that at $80,000, about 62% of cumulative inflows were underwater, yet ETF assets under management only saw a modest decline.

Check warned against relying heavily on the four-year halving cycle as a timing mechanism, labeling it an “unnecessary bias.” Instead, he advocated for focusing on investor behavior first, noting that monitoring when investors buy or sell should take precedence over calendar events.

Even if a low has been established, Check anticipates the market may revisit these levels. He explained that bottoms typically form through multiple phases of capitulation and subsequent periods of “time pain,” where market participants experience boredom and fear. He characterized the current market conditions as being in the late stages of a move, while still acknowledging the possibility of further declines.

From author

The commentary provided by Check reflects a nuanced understanding of Bitcoin’s market dynamics. His emphasis on the probabilistic nature of market bottoms highlights the complexity of cryptocurrency trading and the importance of investor sentiment. By advocating for a focus on behavioral metrics rather than strictly adhering to historical cycles, Check encourages a more adaptable approach to market analysis.

Impact on the crypto market

• The current discussion around Bitcoin’s potential bottom may influence trader sentiment, leading to increased market activity as investors reassess their positions.
• The notion of Bitcoin entering “deep value” territory could attract buyers looking for opportunities amidst the downturn.
• The observed capitulation losses may serve as a psychological indicator for traders, potentially leading to further volatility in the short term.
• The emphasis on investor behavior over historical cycles might shift how traders approach market analysis, focusing more on real-time data.
• The recent outflows from ETFs could indicate a broader market sentiment shift, impacting liquidity and trading strategies.