Bitcoin Struggles to Surpass $74,000 Resistance: Analyst Anticipates Structural Bottom Still Unformed

Bitcoin (BTC) experienced a significant recovery on Friday, registering a 4% increase that allowed the prominent cryptocurrency to approach the crucial $74,000 resistance level. This level has remained unbroken for the last month. However, despite this upward trend, Bitcoin has retraced to around $72,215, positioning itself at the upper limit of its current consolidation range.

Key Takeaways

Bitcoin recently rose by 4% but failed to break the $74,000 resistance, currently trading around $72,215.
Analyst Sunny Mom warns of potential further declines, emphasizing that a definitive market bottom has not formed.
Key factors impacting Bitcoin's price include the Realized Price concentration around $100,000 and the MVRV ratio at 1.2.
Two possible paths for finding a bottom include a sudden crash or prolonged stability between $60,000 and $80,000.
Volatility in the $60,000 to $70,000 range is expected as the market seeks structural support.

Bitcoin

Is Bitcoin Facing More Declines?

Analyst Sunny Mom from CryptoQuant underscores that even with these recoveries, Bitcoin has not yet established a clear bottom. She warns that further declines may be possible, as current on-chain data indicates that the market is undergoing a substantial "stress test."

Analyzing the data, Sunny points out several factors that highlight potential challenges for Bitcoin. First, she notes the 6-12 month cohort of investors, who are currently "underwater" with their Realized Price (RP) centered around $100,000. Many mid-term holders are experiencing losses, which could continue to place downward pressure on prices until this imbalance is addressed.

Sunny also refers to the MVRV (Market Value to Realized Value) ratio, currently at 1.2. This level is often viewed as a “DCA (Dollar-Cost Average) zone” for savvy investors. However, substantial cyclical bottoms usually require the MVRV to fall below 1.0, indicating capitulation has occurred.

Additionally, the role of long-term holders (LTHs) is crucial. A stable price floor generally necessitates that LTHs—individuals holding their investments for over two years—account for more than 20% of the Realized Cap. At present, they make up only about 15%, indicating a lack of strong structural support for a robust recovery. Sunny suggests two possible scenarios for how Bitcoin may eventually find its bottom.

Two Scenarios for Achieving a True Bottom

The first scenario involves a "Black Swan" event—a sudden downturn that forces liquidations among high-cost investors. Although potentially painful, Sunny believes this option could facilitate a quicker establishment of a solid price floor for Bitcoin, possibly within one to two months.

The second scenario, termed "The Great Boring," envisions institutions holding their positions, allowing Bitcoin to oscillate between $60,000 and $80,000 for an extended period. Sunny argues that this could provide the opportunity for new investments to mature into long-term holdings, paving the way for a bottoming process that may extend into late 2026 or early 2027.

While the market may be experiencing a “Value Bottom” favorable for long-term dollar-cost averaging, Sunny's analysis indicates that a true “Structural Bottom” for Bitcoin has yet to materialize. As a result, she anticipates ongoing volatility within the $60,000 to $70,000 range.

Bitcoin The daily chart illustrates Bitcoin's drop back to $72,000 after failing to breach its nearest resistance point. Source: BTCUSDT on TradingView.com
Featured image from OpenArt, chart from TradingView.com