Bitcoin fell to $58,000, landing in a region that long-term power law models have historically associated with cycle bottoms. The data does not indicate that this level is a definitive bottom, but it does indicate that the price has entered a range that has been prominent during major declines since 2014.
What levels does the power law model indicate?
According to analyst Giovanni’s Bitcoin power law model, the long-term trend price of the network is around $135,000. In this context, the recent decline to $58,000 reveals that Bitcoin is trading approximately 54% below its all-time high and 1.22 standard deviations below the long-term trend.
Previous cycle bottoms occurred in a similar statistical range in 2012, 2015, 2019, 2020 and 2022, according to Giovanni. Therefore, the recent pullback points to a region corresponding to historically deep bear market bottoms rather than a deterioration of the long-term growth trend.
The model calculates the frequently viewed minus 1 standard deviation support at around $68,000 and the stronger historical base at around $55,000. Giovanni also noted that Bitcoin must remain below approximately $17,000 for more than a year for the power law to be deemed invalid.
Mini glossary: The power law model is a statistical approach that evaluates the price of Bitcoin according to a long-term curve that grows over time. Standard deviation is used to measure how far the price has moved away from this long-term trend.
The second indicator, signaling in the same direction, also attracted attention. Bitcoin’s power law quantile value decreased to 6.2%. This shows that the asset is located in a cheaper zone than approximately 94% of historical observations according to the model. Similar readings were previously seen at the 2015, 2020 and 2023 cycle bottoms.
Selling pressure and short-term thresholds
It was reported that intense sales on Binance were effective in the sharp decline in the market. Hourly taker sales volume reached $2.1 billion. In the next hour after the New York markets opened, additional sales of $ 1.9 billion were seen. This chart was recorded as the strongest hourly selling pressure in the stock market since May 4.
This drastic move led to the liquidation of over $300 million in leveraged long Bitcoin positions. Then the price recovered towards 60 thousand dollars. According to the analysis, if the daily close rises above $60,000 again, the RSI developing on the one-hour, four-hour and daily charts may maintain the positive divergence. This outlook indicates that selling momentum is weakening, even as the price produces lower lows.
Futures trader Byzantine General states that the move down to $58,000 cleared leveraged long positions and also attracted new short positions. According to him, a daily closing above 60 thousand dollars may strengthen the view that a local bottom has formed in Bitcoin.
The region of 68 thousand dollars above and 55 thousand dollars below stands out
Derivatives market data shows that the next important support area is $55,000. In the upward scenario, the range between 65 thousand and 68 thousand dollars stands out as the main area of interest. According to the data, more than $4 billion in short position liquidations are clustered around $65,000, while this figure remains at around $1 billion below $55,000.
| Level | Featured data |
|---|---|
| 60 thousand dollars | Critical threshold for short-term outlook at daily close |
| 65 thousand dollars | Short position liquidation accumulation of over $4 billion |
| 68 thousand dollars | Upward internal liquidity and additional area of interest |
| 54 thousand to 55 thousand dollars | Realized price and historical support area |
On the other hand, a daily close below 60 thousand dollars may strengthen the downward trend on both short and long-term charts. In this case, the focus will shift to 55 thousand dollars. The area in question stands out as the intersection of the September 2024 weekly range bottom and the realized price level of approximately 54 thousand dollars.
The realized price is known as an indicator that tracks the average cost of all coins on the chain. This level has served as support at every major bear market bottom in Bitcoin since 2014. Therefore, if the selling pressure continues, the range between 54 thousand and 55 thousand dollars can be closely monitored in the market.
