Is BTC Repeating Its 2020 Playbook Or Heading For One More Liquidation?
The debate over whether the bitcoin selloff at the end of January is nearing a cyclical bottom or entering the next leg lower has intensified.
According to Alex Thorne, head of research at Galaxy Digital, the recent price action suggests that the side effects of the lows are rising, and that Bitcoin may move to long-term technical support levels in the coming weeks or months.
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Galaxy Digital warns that Bitcoin may move to long-term support near $58,000
Thorne said in a research note sent to Galaxy clients that the price of Bitcoin could drop to $70,000 and then drop to the 200w MA (roughly $60,000) in the coming weeks or months.
Thorne writes: “…historically, those levels have been strong entry points for long-term investors.
Bitcoin fell 15% between Jan. 28 and Jan. 31, falling 10% on Saturday alone, sparking more than $2 billion in long liquidity in derivatives. Notably, this is one of the largest liquidation events on record.
Prices briefly slipped to $75,644 on the Coinbase exchange, pushing bitcoin up nearly 10% to around $84,000, based on the average cost of U.S. spot Bitcoin ETFs.
At one point, BTC also fell below the strategic average buying price of $76,000 and reached the April 2025 “Tariff Tantrum” low.
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The reduction is a growing share of underwater investors. Tor notes that approximately 46% of Bitcoin's supply is now held at a loss, a level historically associated with late-stage bear markets.
Data on the chain also shows a thin ownership zone between $70,000 and $80,000, an area Thorne says will increase the likelihood of further declines as demand is tested.
“Information on the chain, weakness at key price levels, macro uncertainty and lack of near-term stimulus suggest that BTC will move toward the 200-week moving average in the coming weeks or months,” Thorne wrote in a series.
He added that the confirmed price is currently near $56,000 and the 200-week moving average of $58,000 is consolidating near historical cycle bottoms.
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Bitcoin's macro narrative fades as gold leads, but driving prospects emerge.
Macro dynamics also weigh on sentiment. Bitcoin has failed to rally with gold and silver amid heightened geopolitical and economic uncertainty. This undermines the narrative as a barrier to humiliation.
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Still, not all signs are decidedly bearish. While whaling stocks remain muted, long-term owner profits, estimated at an average of $500 million a day through 2025, are beginning to decline. Historically, a slowdown in long-term holdings coincides with market bottoms.
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Meanwhile, some market watchers see what 2020 could look like. Bull theory suggested in August of that year, when gold turned into a risk asset before capital arrived, fueling the Bitcoin explosion into 2021.
With the ISM index above 50 again, indicating economic expansion, and gold pulling back sharply recently, the firm argued that “we could see a shift in risk assets in the coming months.”
While Galaxy Digital sees some evidence of a limited downside, the company argues that if Bitcoin revisits its confirmed price or 200-week moving average, those levels could act as a long-term safety net, as in previous cycles.
