The Triple Resonance of Bitcoin's Bottom: The Ultimate Direction of Macroeconomics, On-Chain Economics, and Miner Economics

Author: FLAME LABS

summary

This research report aims to comprehensively analyze the core issues facing the Bitcoin market in the first quarter of 2026: After experiencing a sharp pullback from the all-time high of approximately $126,000 in October 2025 to the current range of approximately $60,000-$70,000, where exactly is the absolute bottom of this cycle? The market is currently at a paradoxical crossroads: on the one hand, the traditional "four-year halving cycle" theory suggests that the market is still in the middle of a bear market and may need to undergo a cooling-off period of up to a year; on the other hand, the approval of spot ETFs, the shift in the Federal Reserve's monetary policy (and the uncertainty brought about by subsequent personnel changes), and the iteration of mining hardware are reshaping the underlying logic of the market.

This report abandons simple linear extrapolation and instead constructs a five-dimensional valuation model that includes macro liquidity, miner survival costs (shutdown price), on-chain token distribution (STH vs. LTH game), technical structure (VPVR and 200WMA), and market sentiment (fear and greed). Analysis shows that although the market may not yet fully meet the duration requirement of a "despair period" in terms of historical time span, the price structure and token cost indicate that the $52,000 to $58,000 range converges the miner shutdown price, the 200-week moving average, and a super-dense token distribution peak from 2024-2025, forming a highly confident structural bottom for this cycle.

The report not only validated users' assumptions about the "$72,000-$52,000 super turnover zone," but also further refined the characteristics of capital behavior within this range. In response to the current complex macroeconomic environment (the "Wash shock" brought about by Kevin Warsh's nomination of Fed Chair), it proposed a pyramid position-building strategy based on probability theory.

1. Reconstructing the Macro Narrative: The Failure and Doubts of the Four-Year Cycle

1.1 The Dilemma of "Marking the Boat to Find the Sword": The Linear Extrapolation of Historical Cycles and the Deviation from Reality

In the analytical framework of cryptocurrency assets, the "four-year cycle" theory based on the Bitcoin halving mechanism has long been dominant. This theory, based on marginal changes in supply and demand, posits that Bitcoin's price behavior exhibits a highly cyclical rhythm: a year after halving brings a explosive bull market, followed by a year-long bear market correction, and finally two years of consolidation and recovery. If we strictly adhere to this historical script—a "marking the boat to find the sword" approach—the current market phase is indeed deeply unsettling.

Looking back at historical data, after the bull markets of 2013, 2017, and 2021 peaked, they were often followed by a one-sided decline lasting about 12 months, with the maximum drawdown usually exceeding 80%.

• The 2014-2015 bear market : Prices fell from $1,100 to below $200, a drop of about 85%, taking about 400 days.

• The 2018 bear market: Prices fell from $19,000 to $3,100, a drop of about 84%, over a period of about 365 days.

• The 2022 bear market: Prices fell from $69,000 to $15,500, a drop of about 77%, taking about 376 days.

As of February 2026, the price of Bitcoin has fallen from its October 2025 peak (around $126,000) to around $60,000, a drop of approximately 52%. Kaiko Research astutely points out that this 52% retracement appears "exceptionally shallow" compared to historical cycles. If we strictly adhere to the intensity of historical bear markets, typical bottoms are often accompanied by retracements of 60% to 68% or even deeper, meaning that mathematically, the price still has room to fall further to $40,000 or even lower. Furthermore, from a time perspective, only four months have passed since the October 2025 peak. Following the rule of thumb that "bear markets last a year," the market may need to "grind" in the bottoming area for another four to eight months, until the second half of 2026.

However, this simple linear extrapolation is facing unprecedented challenges. This cycle (2024-2026) exhibits significant structural heterogeneity, primarily manifested in two dimensions:

• The institutional anchor introduced by ETFs: The listing of US spot Bitcoin ETFs not only brought in incremental funds, but more importantly, changed the structure of holders. Institutional funds (such as BlackRock's IBIT and Fidelity's FBTC holdings) have a stronger risk tolerance and a longer investment duration compared to retail investors. Data shows that even when prices fell below the ETF's average cost benchmark (approximately $60,000-$64,000), ETFs did not experience devastating net outflows; instead, they exhibited a "buying on dips" allocation characteristic. This institutional "flooring" effect may significantly raise the market's pain threshold, making it difficult for prices to repeat the crashes seen in over 80% of cases.

• The shift in the dominance of macroeconomic factors: As Bitcoin's market capitalization surpassed the trillion-dollar mark, its asset attributes have evolved from a simple "alternative speculative asset" to a "macroeconomically sensitive sentiment asset." The correlation between Bitcoin and the Nasdaq index, gold, and the 10-year US Treasury yield reached historical highs in 2025-2026. This means that Bitcoin's price fluctuations are no longer solely driven by endogenous halving supply shocks, but are increasingly constrained by the global flow of dollar liquidity.

Therefore, determining "where the bottom is" cannot be done by simply looking at the calendar (time cycle) or the ruler (retracement magnitude), but requires a deep analysis of the macroeconomic variables that are currently driving price behavior.

1.2 The “Wash Shock”: The Fed’s Policy Shift and the Shadow of Liquidity Tightening

The sharp correction in Bitcoin and the entire crypto market in early 2026 was not rooted in an endogenous decline in blockchain technology, but rather in a sudden change in the macro-financial environment—what the market calls the "Warsh Shock."

On January 30, 2026, former Federal Reserve Governor Kevin Warsh was nominated as the new Chairman of the Federal Reserve, succeeding outgoing Jerome Powell. This personnel change triggered significant turbulence in financial markets. Warsh has long been known as an "inflation hawk" and a critic of quantitative easing (QE). His policy leanings, revealed in his nomination hearings and past statements—known as "Warsh Doctrine"—advocate an aggressive "monetary barbell strategy."

• Short-term interest rates: interest rates may remain neutral or even slightly loose to support real economic growth.

• On the balance sheet: Advocating aggressive quantitative tightening (QT) to accelerate the reduction of the Federal Reserve's $6.6 trillion balance sheet in order to restore the central bank's policy space and financial discipline.

This policy mix is ​​expected to directly lead to a surge in long-term Treasury yields. The 10-year US Treasury yield quickly broke through the key psychological level of 4.5% in early February, triggering a valuation reassessment across asset classes. For assets like Bitcoin, which are extremely sensitive to liquidity, the surge in risk-free rates and central bank balance sheet reduction signifies the depletion of marginal buying and the withdrawal of existing funds.

Furthermore, at its January 2026 FOMC meeting, the Federal Reserve decided to maintain the target range for the federal funds rate at 3.50%-3.75%, pausing its previous pace of rate cuts. Although the market still anticipates some rate cuts in 2026, the shadow of "higher for longer" has once again loomed over the market. Analysts from institutions such as JPMorgan Chase and BlackRock point out that, given that inflation has not yet fully returned to the 2% target and the labor market remains strong, expectations of excessive easing have been revised.

This macroeconomic backdrop provides important clues for judging the bottom of Bitcoin: the "market bottom" of this cycle is very likely to coincide with the "liquidity bottom." Before the Federal Reserve stops shrinking its balance sheet or clearly signals an easing of liquidity, it is unlikely that Bitcoin will start a new one-sided bull market; instead, it will likely exhibit wide fluctuations in the bottom range.

2. Miner Economics: The Core Logic of Physical Bottom and the Shutdown Price Defense Line

In Bitcoin's valuation system, miners are not only the maintainers of the network but also the "last line of defense" for price. Miners' production costs (especially electricity costs and hardware depreciation) constitute Bitcoin's "physical floor." When the price falls below the shutdown price of mainstream mining rigs, high-cost miners are forced to shut down, leading to a decrease in the network's hashrate, which in turn triggers a difficulty reduction. Ultimately, this lowers the unit cost for the remaining miners, creating a self-regulating price mechanism. This process is known as "miner capitulation," and historically, it has often been one of the most accurate signals of cyclical bottoms.

2.1 Major Computing Power Cleanup: The Largest Retreat and Difficulty Reduction Since 2021

In February 2026, the Bitcoin network underwent a historic stress test. Data showed that the mining difficulty of the Bitcoin network plummeted by approximately 11.16% during an adjustment cycle. This was the largest single negative adjustment the network had experienced since China imposed a complete ban on Bitcoin mining in 2021.

Behind this dramatic decrease in difficulty is a significant pullback in the network's hashrate. The hashrate has decreased by approximately 20% from its peak in October 2025 (over 1.1 ZettaHashes/s) to around 863 ExaHashes/s. This "great retreat" is caused by two factors:

• The economic pressure of the price crash : The price of the coin was halved in a short period of time (from $126,000 to $60,000), directly breaking through the break-even point of a large number of low- and mid-range mining machines and mining farms with high electricity costs.

• Unforeseen physical impact: A winter storm codenamed "Fern" swept across North America, causing power shortages in mining hubs like Texas. In response to grid curtailment or due to soaring electricity costs, numerous mining farms were forced to physically shut down.

While this hashrate cleanup may seem like a negative factor, it actually lays the foundation for the formation of a market bottom. Historically, deep pullbacks in hashrate and reductions in difficulty have often signaled the exhaustion of selling pressure. When the most vulnerable miners leave the market, those who remain are long-term participants with excellent cost control and strong financial resources, forming the most solid group of holders at the bottom.

2.2 Shutdown Price Map: The Lifeline of $52,000-$58,000

To accurately pinpoint the exact bottom, we need to analyze the shutdown price of mainstream mining rigs. Based on the current network difficulty (approximately 125.86 T) and typical industrial electricity costs (US$0.06/kWh to US$0.08/kWh), we can create a "life-or-death map" for miners.

2.2.1 The Twilight of the S19 Series: $75,000 - $85,000

The Antminer S19 series (including S19j Pro, S19 XP, etc.) was the mainstay in the previous cycle, but after being halved in 2024, its energy efficiency ratio has gradually fallen behind.

• With an electricity rate of $0.08/kWh, the shutdown price of the standard S19 and some Pro models is as high as $85,000 or more.

Even the more energy-efficient S19 XP has a shutdown price of around $75,000.

• Conclusion: At the current market price of around $67,000, the vast majority of miners who rely on the S19 series and lack advantages in electricity costs are already in a severely underwater state (operating at a loss). This is the main source of the recent decline in hashrate, and it also means that the selling pressure on this marginal hashrate has been almost completely released.

2.2.2 The Battle to Defend the S21 Series: $69,000 - $74,000

The Antminer S21 series is currently the backbone of the entire network's computing power and represents the current mainstream energy efficiency level.

• Data indicates that the S21 series has a shutdown price range of approximately $69,000 to $74,000 at a cost of $0.08/kWh.

• This data point is crucial. The current price (around $67,000) has already pierced this range. This means that even miners with newer equipment but slightly higher electricity costs are beginning to face the decision to shut down. When mainstream mining rigs begin to shut down, the market is usually very close to its bottom.

2.2.3 Ultimate Physical Bottom: $44,000 (S23/U3S23H)

Bitmain's latest S23 series and U3S23H represent the current limits of energy efficiency in human engineering.

• The shutdown price for this type of machine is as low as around $44,000.

• This constitutes the "extreme physical hard bottom" of this bear market. Unless there is a global financial system collapse or a disaster at the Bitcoin protocol level, it is extremely difficult for the price to fall below this level, because that would mean that almost all of the network's computing power would be at a loss, and network security would have to be rebuilt.

Comprehensive analysis: The $52,000 to $58,000 range is not only a technical support level, but also a "Maginot Line" for miners' economics. If prices fall to this range, it will force large-scale shutdowns of the S21 series (even for miners with low electricity costs), triggering a deeper capitulation and difficulty reduction. Historically, this level of miner capitulation often marks the absolute bottom of a cycle.

3. On-chain token distribution: Who is panicking, and who is greedy?

If miners define the physical lower limit of the bottom, then the distribution and flow of on-chain tokens reveal the psychological game at the bottom. On-chain data provides us with a "God's-eye view" of the behavior of market participants (short-term speculators and long-term believers). The current on-chain state exhibits typical characteristics of "surrender and transfer," which is a necessary stage in the bottom formation process, but it is not yet fully completed.

3.1 The complete collapse and surrender of short-term holders (STH)

The price crash in early February 2026 was essentially a "massacre" of short-term holders (STH). STH refers to addresses that hold coins for less than 155 days, and they are generally considered the least determined and most sensitive group to price fluctuations in the market—the so-called "retail investors" or "trend chasers".

On-chain data shows that the drop in Bitcoin below $70,000 and its subsequent slide towards $60,000 triggered a panic sell-off in STH. On February 6th alone, over 100,000 Bitcoins were transferred to exchanges from STH. This massive inflow is a classic sign of capitulation, indicating that a large number of those who bought at the highs of late 2025 are now selling at a loss.

A more critical indicator is the STH Realized Price, which is the average holding cost for short-term holders.

• STH's realized price: approximately US$92,337.1

• Current market price: approximately US$67,000.

This is a staggering figure. It means that short-term holders, as a whole, face an average unrealized loss of nearly 30%. Historical patterns show that the true bottom of a bear market usually occurs when short-term holders (STH) are completely desperate and losing positions have been completely wiped out. At this point, the realized price of STH will decline rapidly, even forming a "death cross" with the realized price of long-term holders (LTH) (i.e., short-term costs are lower than long-term costs, meaning that new entrants have lower costs than experienced holders, and the market is extremely undervalued).

Currently, although STH is operating at a loss, it is still some distance from significantly lowering its cost line and crossing with LTH. This suggests that the market may need to go through a period of "bottoming out," using a prolonged period of low-level consolidation to "outlast" high-cost shares and lower STH's average cost.

3.2 The underlying position game and accumulation of long-term holders (LTH)

In stark contrast to panicked retail investors, long-term holders (LTH, holding coins for more than 155 days) are beginning to show signs of re-accumulating. Bitfinex's Alpha report indicates that after a period of sustained distribution (selling for profit) at the peak of the bull market in the second half of 2025, LTH holdings bottomed out in December 2025 and have begun to recover, currently holding approximately 14.3 million BTC.

• LTH realized price: approximately $40,311.

• Overall Realized Price: Approximately $55,207.1

The realized price across the network (around $55,200) is another crucial support level. It represents the average price of all coins on the Bitcoin network at the time of their last move, essentially the average cost across the entire market. In a deep bear market, the spot price often briefly dips below the realized price, creating extreme despair (meaning the entire market is losing money on average), before completing a V-shaped reversal. Currently, the price (around $67,000) is only about 18% away from this support level, further validating the high risk-reward ratio of the $50,000-$58,000 range.

3.3 The divergence and convergence between whale behavior and ETF flows

It is worth noting that the behavior patterns of institutional funds are undergoing subtle changes. Although ETFs experienced net outflows at the beginning of 2026, exacerbating market selling pressure, the flow of funds reversed when prices reached the $60,000 mark.

Data from February 10th showed that the US spot Bitcoin ETF recorded a net inflow of $166 million, with BlackRock's IBIT accumulating shares against the market crash. This "buying on dips" behavior by institutional investors contrasts sharply with the panic selling by retail investors. This suggests that for institutional funds focused on asset allocation, $60,000 has entered their value allocation range.

4. Technical Analysis: From "Super Turnover Zone" to "Psychological Barrier"

Leaving aside fundamentals and on-chain data, from the perspective of price action and technical indicators alone, the current bottoming signal is equally clear and strong.

4.1 The “Super Turnover Zone” from VPVR’s Perspective: A Chip Maze of 72k-52k

The Visible Range Volume Profile (VPVR) is like an X-ray machine for identifying support and resistance. It clearly outlines the volume structure during the 2024-2025 bull market. VPVR shows that the large range of $72,000 to $52,000 was a "super turnover zone" over the past two years, accumulating massive historical trading volumes.

• $70,000 - $72,000 (resistance above): This previous strong support level has now become significant resistance after being broken. A large amount of capital bought in this range (including some ETF purchases) is currently trapped, and any rebound to this level will face selling pressure from those looking to break even. This is why recent rebounds have repeatedly stalled at $71,000.

• $52,000 - $58,000 (the solid support level): This is the lower edge of the trading range and the area with the highest concentration of "High Volume Nodes" (HVNs) as shown by VPVR. This range not only features a large accumulation of historical trading volume but also incorporates the price structure from the previous bull market (2021). This is the last bastion for the bulls; a break below this level would lead to a sparsely traded "vacuum zone," and the price could quickly plummet to $40,000.

4.2 200-Week Moving Average: The Battle to Defend the Bull-Bear Dividing Line

The 200-Week Moving Average (200WMA) is the most reliable and respected long-term bottom indicator in Bitcoin's history. It represents the average holding cost over the past four years and is often regarded as a dividing line between bull and bear markets.

Currently, the 200-week moving average has risen to around $58,000.

• Historical backtesting: At the bottom of the bear markets in 2015 and 2018, Bitcoin's price rebounded after touching or slightly falling below the 200-week moving average. Although the 2022 bear market briefly dipped below this moving average, the subsequent V-shaped reversal once again proved its effectiveness as a "value center."

• Current Status: As of February 2026, the Bitcoin price is testing this key moving average. If the price can effectively hold above $58,000, it will highly likely confirm the bottom of the cycle. This technical indicator, along with the miner shutdown price (S19 series) and the total network realized price (55k), forms a perfect triple resonance in the $52k-$58k range.

4.3 Sentiment Indicators: Opportunities Amidst Extreme Panic

• Fear & Greed Index: This index has recently fallen to the "extreme fear" range of 5-11. This is the lowest level since the FTX crash in 2022. Warren Buffett's famous quote, "Be greedy when others are fearful," has extremely high statistical value at this moment. Historical data shows that when this index remains in single digits for an extended period (more than several weeks), it is often the best buying opportunity for long-term funds.

• Social media sentiment: Discussions and sentiment on social media platforms (Twitter/X, Reddit) are characterized by "death silence" or extreme pessimism. The so-called "death cross" not only appears on candlestick charts but also in the public discourse. This low-volatility state, where retail investors have completely exited the market and no one is paying attention, is a necessary psychological condition for the formation of a bottom.

5. Stablecoins and Liquidity: The Overlooked Reservoir

While analyzing price declines, we cannot ignore the market's potential purchasing power—stablecoins. Stablecoin market capitalization is a core indicator for measuring the "dry powder" of the crypto market.

Despite the significant pullback in Bitcoin prices, the total market capitalization of stablecoins did not experience a collapse like in 2022, but instead remained near its all-time high of $311 billion. This indicates that funds have not truly left the crypto ecosystem, but rather retreated from highly volatile Bitcoin/altcoins, residing on-chain as safe-haven assets (USDT/USDC).

• USDT vs. USDC: Notably, USDC's growth rate has surpassed USDT's for the second consecutive year, and its share in DeFi and institutional settlements continues to increase. This indicates a stronger willingness among compliant and institutional funds to enter the market, as they await clarity on-chain regarding the macroeconomic environment.

• Poised for Takeoff: The high market capitalization of stablecoins acts like a massive reservoir. Once market trends reverse (such as the Federal Reserve halting balance sheet reduction or prices breaking through key resistance levels), this purchasing power of over $300 billion will quickly translate into fuel driving price increases. Therefore, closely monitoring changes in stablecoin market capitalization, especially large-scale issuances of USDC, will be crucial signals for capturing right-side trading opportunities.

6. Conclusions and Strategies: How to Strategically Position Yourself in the Eye of the Storm

6.1 Where is the bottom? — Triple Validation Model

Based on the above macroeconomic, mining, on-chain, and technical analyses, we can construct a comprehensive bottom verification model, concretizing the vague "bottom" into three specific intervals:

• Physical bottom ($44,000 - $52,000):

Definition: This is the shutdown price defense line for the latest generation of high-efficiency mining machines such as S23, and also the theoretical target level for the historical extreme retracement (60%-70%).

Probability: Low (<20%). Unless a systemic financial collapse occurs (such as a liquidity crisis caused by the Federal Reserve's aggressive balance sheet reduction), the probability of reaching this area is not high, making it an "extreme bargain hunting zone".

• Value bottom ($52,000 - $58,000):

Definition: This is the overlapping area of ​​the 200-week moving average, the realized price across the entire network, and the combined shutdown price of S19/S21 miners. It is also the lower edge of the super-dense chip accumulation zone displayed by VPVR.

Probability: Extremely high (>60%). This area has extremely strong support and is a defensive line that major funds are likely to have established. The market may briefly touch this level through a "pin drop" pattern, but it is unlikely to sustain its position below this level for long.

• Sentiment bottom ($60,000 - $65,000):

Definition: This is the "preliminary battle" of the current market test, and also a psychological barrier. Although panic and ETF fund inflows have emerged, considering that the STH cost has not yet been deeply cleared, this position may require repeated fluctuations and cleansing, and may even face the risk of a "false break" to induce short selling.

6.2 Investment Strategy: Pyramid-Style Position Building Method

Given that the bottom is a range rather than a single point, and that macroeconomic uncertainties (Federal Reserve policy) still exist, investors are advised to abandon the gambler's mentality of "going all in" on the bottom and instead adopt a pyramid-style approach to accumulate shares in batches to smooth out costs and control risk.

• First Tier (60k-65k): Establish a base position (approximately 20%-30% of the portfolio). Although this position may seem precarious, it has entered a high risk-reward ratio zone, suitable for long-term allocation, to prevent missing out on potential gains.

• Second tier (52k-58k): Core accumulation zone (approximately 40%-50% position). Once the price touches the 200-week moving average or the price range of the main mining companies' shutdown, the allocation should be increased decisively. This is the most cost-effective entry point in this cycle.

• The third tier (44k-52k): Extreme defensive zone (20%-30% liquidity reserved). This is to cope with potential "black swan" events, such as a liquidity crunch caused by macroeconomic deterioration. If the market does not fall to this level, this portion of funds can be used to chase the rise after the right-side trend is confirmed.

Observe the signal on the right side of the bottom:

In addition to placing orders on the left side, investors should also pay close attention to the following signals on the right side:

• A long lower shadow on a daily chart with high volume indicates that the bears have exhausted their strength and the bulls have launched a strong counterattack at a key level.

• When the STH price crosses below the LTH price, or when the two are extremely close, it signifies a complete change of ownership and the completion of the bottom formation.

• Stablecoin market capitalization has rebounded significantly: in particular, the issuance of USDC represents a recovery in institutional purchasing power.

• The Federal Reserve has softened its stance: any hint of halting balance sheet reduction or slowing interest rate hikes would be the starting gun for liquidity.

In this cold "crypto winter," patience is the greatest asset. Cycles may be late, but they never fail to arrive. For staunch believers, the $52,000-$58,000 range may be God's last gift in the next four years.

Disclaimer: This report is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make independent decisions based on their own risk tolerance.