Bitcoin has declined by nearly half since last October. A crypto fund manager who has experienced the previous three bull and bear cycles stated that a set of indicators, which have historically signaled market bottoms, suggest this selling phase may be entering its final stages.
Brett Munster of Blockforce Capital uses four metrics to assess Bitcoin's position in the current downturn. One indicator has already entered a range that corresponded with market lows in past cycles. Two other indicators are clustered around $54,000 to $58,000, which remains below Bitcoin's current price of approximately $73,800. After briefly touching $60,000 in February, Bitcoin staged a significant rebound, implying it has already reached the upper boundary of what Munster considers a potential bottoming zone.
The gap between the current price and the levels where these indicators would be fully triggered might superficially suggest caution is warranted. However, Munster argues this is not the case, reasoning that during the last bear market, the difference for long-term holders between buying at $19,000 and catching the ultimate low of $15,600 was almost negligible.
While a market bottom is not guaranteed, Munster said, "The majority of the decline is likely behind us, and the risk-reward asymmetry is improving. A market turnaround could occur around mid-year."
On Friday, Bitcoin rose as much as 5% to around $73,800, before paring gains as U.S. stocks turned lower during the session. Despite this, digital currencies outperformed major U.S. stock indices, as well as gold and silver.
The indicator that has already signaled is the MVRV Z-Score, which measures where Bitcoin is trading relative to its on-chain cost basis. When this score falls below 0.4, Bitcoin is typically considered undervalued. The metric currently stands at approximately 0.38.
The other indicators have not yet reached their respective levels. These include:
The Realized Price, which is the average price at which each Bitcoin last moved on the blockchain, is currently around $54,000.
The 200-week moving average, often a key support level in past cycles, is currently around $58,000.
Another observed pattern is that the magnitude of declines from peak to trough has been shrinking, often seen as a sign of an asset class maturing with increased liquidity and participation. This pattern suggests a potential bottom in the $45,000 to $55,000 range.
Collectively, these four indicators point to what Munster calls a "high-probability accumulation zone," roughly between $45,000 and $60,000.
Even if selling pressure subsides, a sustained market recovery will require new demand. There are already some signs of capital returning. U.S.-listed spot Bitcoin ETFs have begun attracting inflows again after months of outflows. According to media data, inflows into funds including the iShares Bitcoin Trust ETF (IBIT) and the VanEck Bitcoin Trust ETF (HODL) have totaled over $1.6 billion in the past month.
Commenting on this, Munster stated, "Once selling pressure eases, even modest new inflows could be sufficient to push the market higher."
It is also noteworthy that some analysis points to Bitcoin recently acting as a geopolitical "barometer."
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