Bitcoin (BTC) has been attempting to climb back above $78,000 after experiencing severe losses over the weekend, but bears regained dominance and pushed the price downward. Recent on-chain data and trends indicate ongoing downside risks for Bitcoin, according to Alex Thorn, head of research at Galaxy Digital.

Thorn cites insufficient momentum, macroeconomic unpredictability, and lack of catalysts, pointing toward continued distress rather than a chance for recovery.

Strengthening Downtrend

In his latest report, Thorn noted the significant drop observed at the end of last month, where Bitcoin plummeted 15% between January 28 and January 31, with the decline exacerbating during the weekend. On Saturday alone, the crypto market witnessed a nearly 10% drop, which resulted in one of the largest liquidation events recorded, affecting over $2 billion in long-position liquidations across futures exchanges.

During this period, Bitcoin’s value plummeted to about $75,644 on Coinbase, dropping around 10% below the average cost basis of the US spot Bitcoin ETFs, estimated to be approximately $84,000. At one point, the cryptocurrency also traded below its reported average cost basis of $76,037, nearing its one-year low of $74,420, reached during the April 2025 “Tariff Tantrum.”

Thorn pointed out that 46% of Bitcoin’s circulating supply is now underwater, meaning those coins were last transacted on-chain at higher prices. Notably, January closed out with four consecutive monthly declines, a situation not seen since 2018. The analyst added that except for 2017, Bitcoin has never faced a 40% drawdown from its all-time high without a subsequent decline of 50% or more within three months, implying that current price levels might drop close to $63,000.

The researcher also noted a notable gap in on-chain ownership between approximately $82,000 and $70,000, which suggests a lack of demand in this range, increasing the probability of further declines.

Overall, analysis suggests Bitcoin’s realized price is nearing $56,000 while the 200-week moving average sits around $58,000—these levels gradually increase as long as spot prices stay above.

Further Declines Expected

Crypto analyst Doctor Profit has revised his expectations for Bitcoin’s cycle bottom downward, after the recent price drop. Following the loss of critical support levels, he now predicts the cycle bottom to lie between $54,000 and $44,000, adjusted from his previous estimate of $50,000 to $60,000.

In summary, several indicators suggest that Bitcoin may be heading towards testing lower support levels in the coming weeks or months.