Bitcoin May Not Have Hit Bottom Yet, Analyst Says

Bitcoin’s 22% Pullback May Not Be Over Yet, Analyst Warns as Key Market Signals Remain Weak

Bitcoin's latest correction has sparked growing debate among investors over whether the market is approaching a major bottom or simply entering another phase of weakness. After falling approximately 22% from its recent high, many traders have begun searching for signs that the worst may be over.

Historically, sharp declines in Bitcoin have often created opportunities for long-term investors. When fear dominates market sentiment and traders begin selling at losses, some analysts view such conditions as indicators that a recovery may be approaching.

However, not everyone is convinced that the current correction has reached its final stage.

Crypto market analyst Axel Adler Jr. believes that despite mounting pressure across the Bitcoin ecosystem, the data suggests the market has not yet experienced the kind of extreme capitulation that typically accompanies major cycle bottoms.

His assessment is based on multiple on-chain and market indicators, all of which appear to be pointing toward the same conclusion: Bitcoin may still face additional downside risks before a sustainable recovery can begin.

Bitcoin's Decline Raises Questions About Market Direction

Bitcoin has lost significant value since reaching its recent peak, with the correction wiping billions of dollars from the network's overall valuation.

The decline has been accompanied by persistent selling activity, weaker market participation, and increasing signs of caution among both retail and institutional investors.

While corrections of this magnitude are not uncommon in Bitcoin's history, market participants are closely watching whether current conditions resemble previous market bottoms or merely represent an intermediate stage within a broader downtrend.

Many investors have pointed to the fact that traders have been realizing losses for an extended period as evidence that capitulation may already be underway.

Yet Adler argues that deeper analysis tells a different story.

According to the analyst, the current market environment reflects stress and caution, but not the level of panic historically associated with definitive bear market lows.

"The stress is there, but the extreme is still not," Adler noted in his latest market assessment.

That distinction could prove critical for investors attempting to identify the next major turning point.

Five Market Indicators Paint a Concerning Picture

One of the reasons Adler's analysis has attracted attention is that it does not rely on a single data point.

Instead, his outlook is supported by five separate categories of market indicators, including on-chain activity, derivatives positioning, miner behavior, exchange flows, and profitability metrics.

When multiple indicators begin sending similar signals simultaneously, analysts often view the trend as more significant than isolated anomalies.

According to Adler, each of these indicators suggests that market conditions remain fragile despite recent stabilization attempts.

MVRV Z-Score Continues to Cool

One of the most closely watched valuation metrics in the Bitcoin market is the Market Value to Realized Value (MVRV) Z-Score.

The indicator helps analysts determine whether Bitcoin is trading above or below its historical fair value.

Recent data shows the MVRV Z-Score has fallen to approximately 0.32, significantly below its historical average of 1.71.

While lower readings can indicate reduced speculation and healthier valuations, Adler notes that previous cycle bottoms often occurred at even lower levels.

As a result, the current reading suggests that excess market optimism has been removed, but it does not necessarily confirm that Bitcoin has reached a final bottom.

Investors Continue Selling at a Loss

Another important signal comes from the Adjusted Spent Output Profit Ratio, commonly known as aSOPR.

This metric measures whether investors are selling Bitcoin at a profit or a loss.

When the ratio remains below 1, it indicates that market participants are realizing losses on their transactions.

According to recent data, aSOPR has remained below the critical threshold of 1 for nearly two weeks, currently standing around 0.987.

Source: Xpost

This trend reflects ongoing weakness in investor sentiment and suggests that many holders are choosing to exit positions despite unfavorable prices.

While loss realization is often present during market bottoms, Adler points out that the scale of selling has not yet reached levels typically associated with full capitulation events.

Exchange Flows Suggest Continued Selling Pressure

Bitcoin exchange activity also remains a key area of concern.

Recent data indicates that approximately 91,000 BTC have been transferred onto cryptocurrency exchanges.

Historically, increased exchange inflows are often interpreted as a sign that investors may be preparing to sell their holdings.

Although exchange deposits do not guarantee immediate liquidation, they generally increase the amount of Bitcoin available for potential selling activity.

At the same time, stablecoin flows have been moving in the opposite direction.

More than $119 million worth of stablecoins have reportedly left exchanges during the same period.

This trend may indicate reduced buying power among market participants, as stablecoins are commonly used to purchase Bitcoin and other digital assets.

When exchange inflows rise while stablecoin reserves decline, market liquidity can become less supportive of sustained price recoveries.

Derivatives Data Raises Additional Concerns

The derivatives market is also sending mixed signals.

According to Adler, open interest has continued to decline even as Bitcoin has managed to rebound from lower price levels.

In healthy market recoveries, rising prices are often accompanied by increasing open interest as new capital enters the market.

However, declining open interest during a rebound can suggest that the move is being driven primarily by short covering rather than genuine buying demand.

Short covering occurs when traders who previously bet against the market close their positions, creating temporary upward pressure without introducing significant new investment capital.

This distinction is important because rallies fueled by short covering tend to be less sustainable than rallies supported by fresh demand.

As a result, the current recovery may not be as strong as headline price movements suggest.

Miner Stress Emerges as a Critical Risk Factor

Among all the indicators being monitored, miner activity may represent the most important variable in the months ahead.

Bitcoin miners play a crucial role in securing the network, but their operations are highly sensitive to market conditions.

When Bitcoin prices decline while mining costs remain elevated, profitability can come under significant pressure.

According to Adler, several metrics indicate that miner stress is beginning to increase.

One of those indicators is the Puell Multiple, which measures miner revenue relative to historical averages.

The current Puell Multiple sits around 0.73, suggesting that miners are earning substantially less than they have during stronger market periods.

Although the reading has not yet reached historical capitulation levels, it is moving in that direction.

Adler warns that further weakness could force miners to liquidate larger portions of their Bitcoin reserves to cover operational expenses.

Why the $55,000 Level Matters

The analyst believes that $55,000 could become one of the most important price levels for Bitcoin during the current cycle.

According to his research, Bitcoin's Price-to-Miner-Revenue ratio has declined dramatically, falling from approximately 160 to 80.

At the same time, Bitcoin is trading roughly 21% below the Difficulty Bottom indicator, another metric used to assess miner profitability and market stress.

Source: Xpost

If Bitcoin falls below $55,000 while the Puell Multiple drops under 0.50, the likelihood of miner capitulation could increase significantly.

Historically, miner capitulation events have often coincided with major market bottoms.

During both the 2018 and 2022 bear markets, significant miner selling occurred near the final stages of the downturn, helping establish conditions for eventual recoveries.

However, Adler believes the current market has not yet reached that point.

Instead, miners appear to be experiencing growing pressure without entering full-scale capitulation.

What History Suggests About Market Bottoms

Bitcoin's history shows that major market bottoms are rarely formed under calm conditions.

Instead, they are often characterized by extreme fear, widespread pessimism, forced liquidations, and aggressive selling from weaker participants.

These environments typically create the kind of emotional exhaustion that eventually allows long-term buyers to regain control of the market.

While current conditions reflect caution and uncertainty, many of those classic capitulation characteristics remain absent.

Investor sentiment has weakened, but not collapsed.

Selling pressure has increased, but not reached panic levels.

Miner stress is rising, but not yet at historical extremes.

For Adler, these distinctions suggest that Bitcoin may still need to undergo additional market cleansing before a durable bottom can emerge.

Outlook: Cooling Market or Final Capitulation Ahead?

Bitcoin remains one of the most closely watched assets in global financial markets, and every major correction attracts intense scrutiny from investors searching for opportunities.

While some traders believe the recent 22% decline represents a buying opportunity, Adler's analysis highlights several reasons for caution.

The convergence of weak on-chain activity, declining derivatives participation, increased exchange inflows, stablecoin outflows, and mounting miner pressure paints a picture of a market that is cooling but may not yet be exhausted.

Whether Bitcoin ultimately finds support above current levels or experiences another wave of selling will likely depend on how these indicators evolve in the coming weeks.

For now, the data suggests that the market is under pressure, but the kind of extreme fear that has historically marked major Bitcoin bottoms may still lie ahead.

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Writer @Erlin
Erlin hallen is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.
 
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