Bitcoin Faces Short-Term Weakness Amid Technical and Macro Pressures

Alex Thorn, Head of Research at Galaxy, recently shared insights on social media suggesting that Bitcoin may continue its downward trajectory over the coming weeks to months. Factors such as on-chain data trends, weakening technical levels, macroeconomic uncertainty, and a lack of near-term catalysts all point to a potential further decline. This environment increases the likelihood of price testing lower support zones.

In late January, Bitcoin fell nearly 15% between January 28 and 31, accelerating further over the weekend. On Saturday alone, the price dropped by 10%, with approximately 46% of the circulating supply now underwater. Following January’s close, Bitcoin recorded four consecutive monthly red candles for the first time since 2018.

Historical Drawdown Patterns Signal Potential Support

Historically, outside of 2017’s unique rally, Bitcoin has tended to deepen its drawdown after a 40% retracement from its all-time high (ATH), typically falling beyond 50% within three months. If Bitcoin follows this pattern, a 50% retracement would place the price near $63,000.

Currently, a notable on-chain vacuum exists between $70,000 and $82,000, increasing the chances that Bitcoin tests this zone to assess demand. The realized price stands around $56,000, while the 200-week moving average is near $58,000.

Market Sentiment Soft, No Whale Accumulation Signs

There is still no clear evidence of whales or long-term holders aggressively accumulating supply, although long-term selling pressure has notably slowed. Short-term catalysts remain scarce, and Bitcoin has not joined gold and silver in recent inflation-hedge trades, which weakens its narrative appeal.

While the potential passage of the CLARITY Act could offer an exogenous catalyst, the probability of near-term approval has declined. Even if passed, the benefits may favor altcoins more than Bitcoin.

Long-Term Investors May Find Opportunity in Potential Downturn

Although Bitcoin may remain range-bound near ETF cost levels, a deeper pullback toward $70,000 remains plausible, with a potential test of realized price and the 200-week moving average over the coming weeks and months. Historically, such levels have marked cycle lows, offering strong entry opportunities for long-term investors as market sentiment bottoms out and new trends begin to form.