Bitcoin staged a modest rebound after sliding to a near eight-month low around $87,500 on Wednesday, with the price recovering toward the $90,000 mark by Thursday. The bounce eased immediate oversold pressures but did little to change the broader downtrend, as traders weighed a growing chorus of warnings that the market may already be in a cyclical bear phase.
Adding to the caution, a prominent market strategist projected a potential path toward $40,000 by late 2026, arguing that liquidity cycles and historical drawdowns could pull BTC back to long-term value areas before the next sustained advance. While not a consensus view, the call underscores rising skepticism after months of lower highs, deteriorating momentum, and persistent outflows across risk assets.
Market Snapshot
- Price action: Recovery from ~$87,500 toward $90,000 after a sharp midweek sell-off.
- Momentum: Trend still points lower on multi-week timeframes despite intraday bounces.
- Volatility: Spikes in realized and implied volatility as liquidity thins around key supports.
- Breadth: Large caps and majors underperforming while select altcoins see capitulation-style moves.
Why Bears Say the Cycle Has Turned
Bears argue the structure has shifted from “buy-the-dip” to “sell-the-rally.” Several factors feed that narrative:
- Lower highs across the daily and weekly charts after repeated failures near psychological resistance zones.
- Rotation out of high-beta crypto assets as macro uncertainty weighs on risk appetite.
- Signs of miner stress following compressed margins, encouraging periodic distribution into strength.
- Cooler spot demand relative to supply, with liquidity pockets thin below recent ranges.
Together, these elements align with past transition phases where the market oscillated violently before establishing a longer base.
The $40,000 Thesis
The headline-grabbing forecast for $40,000 by late 2026 is rooted in historical cycle behavior and mean reversion. In prior cycles, Bitcoin’s peak-to-trough drawdowns commonly ranged between 55% and 80%, typically retracing to or below multi-year realized price bands before forming durable bottoms.
If the latest cycle’s peak was established near the six-figure region, a 60% to 65% retracement would mechanically derive targets in the $40,000 to $50,000 range. The analyst’s argument is that a prolonged macro normalization—slower global growth, tighter liquidity, and periodic risk-off episodes—could stretch this process into late 2026, especially if earnings, employment, or policy expectations deliver negative surprises.
On-Chain and Derivatives: What the Data Suggests
- Long-term value zones: Valuation metrics gravitating toward neutral suggest less froth but not definitive capitulation.
- Profit/loss dynamics: Episodes where spent outputs flip to loss-taking often precede relief rallies but can recur in downtrends.
- Futures and funding: Periodic negative funding and reduced basis point to cautious leverage and risk trimming.
- Options positioning: Elevated put skew at key tenors reflects demand for downside protection into year-end.
These mixed signals fit a market that is de-risking without a wholesale capitulation—conditions that can produce sharp, tradable rallies within a broader decline.
Key Levels to Watch
- $86,000–$88,000: Recent support band; a sustained break risks a slide into lower liquidity zones.
- $80,000: Psychological and structural demand area; potential for reflexive bounces on first touch.
- $90,000–$92,000: Near-term pivot; acceptance above improves odds of a relief rally.
- $100,000: Heavy resistance; reclaiming and holding above would challenge the bear narrative.
What Could Invalidate the Bear Case
- Consistent spot-led accumulation evidenced by rising on-chain settlement and stronger realized gains.
- Sustained improvement in liquidity and risk sentiment across global markets.
- Stabilization in miner behavior alongside a rebound in network fee revenue.
- A decisive weekly close back above major resistance with expanding volume and breadth.
Any combination of these catalysts would weaken projections for a deep, prolonged retracement and reduce the probability of sub-$50,000 targets.
Outlook
Near-term volatility is likely to remain elevated as BTC battles to defend the high-$80,000s. The recovery toward $90,000 eases pressure but does not yet invalidate the pattern of lower highs. With at least one well-followed analyst mapping downside to $40,000 by late 2026, the burden of proof is on bulls to reclaim and hold key resistance levels.
For now, risk management remains paramount: respect support, sell into strength if trend signals remain bearish, and watch for a shift in spot demand, breadth, and on-chain flows before calling a durable bottom.