Bitcoin Nears Bear Market Low as Recovery Remains Uncertain
Bitcoin is nearing a historic support level, but weak sentiment and macro pressure are making a recovery still uncertain. Read what this could mean for the coming months.
Key Takeaways
- Bitcoin is trading close to the 200-week moving average and, according to Checkonchain, is in the bottom 10% of its historical valuation range.
- The Crypto Fear and Greed Index is at 9, pointing to extreme fear and weaker confidence among price-sensitive investors.
- Higher U.S. inflation, outflows from Bitcoin ETFs, and a dip below $60.000 are adding extra pressure to the crypto market.
Bitcoin is currently trading around a level that, historically, mostly shows up in the deepest phases of bear markets. The price has moved close to the 200-week moving average, an important indicator that shows the average of Bitcoin's weekly closing prices over the past 200 weeks. This level often acts as support during long declines and is closely watched by long-term investors.
Long-Term Bear Market Structure and Market Sentiment
According to data from Checkonchain, Bitcoin is in the bottom 10% of its historical valuation range, a zone that is usually only reached during the sharpest sell-offs. The Crypto Fear and Greed Index, which measures market sentiment using volatility, social media, and trading volume, is currently at 9, pointing to extreme fear. This sentiment has weakened compared with last week and a month ago, suggesting that price-sensitive investors have largely exited their positions.
Analysts stress that a bear market bottom is not a sudden event, but a process. After the first phase of capitulation, there is often a stretch of sideways trading that can last for months, while the remaining holders slowly lose confidence. That process can slow Bitcoin's recovery.
Impact of Macroeconomic Factors and Market Developments
The recent rise in U.S. inflation, with an annual increase of 4.2% in May, is adding more pressure to the crypto market. Higher energy prices and geopolitical tensions, such as the war in Iran, are contributing to that inflation pressure. Even though core inflation, which excludes food and energy, rose a little less than expected, the macro backdrop remains challenging.
On top of that, ongoing outflows from Bitcoin ETFs are adding more downward pressure. Bitcoin briefly fell below $60.000 (€52.000) this week, a level not seen since 2024. Other major cryptocurrencies like Ethereum, Binance Coin, and Solana posted small gains, but they are still down for the week overall.
Why This Matters for European Crypto Investors
For European investors, it's important to understand that Bitcoin is sitting at a technically important level that has often marked the bottom of bear markets in the past. At the same time, macro conditions and sentiment point to a possible long stretch of sideways trading. That could affect volatility and liquidity in the European crypto market, especially given how closely it is tied to global economic developments and regulation.
