The recent downturn in Bitcoin’s price has led market analysts to explore the possibility of a price floor being established. A notable on-chain researcher has indicated that the risk-reward dynamics have altered significantly following this selloff.
Summary
Researcher “Checkmate” Check suggests that Bitcoin may now be in a state of “deep value.” The capitulation losses observed during this latest selloff are reminiscent of those seen at the lows of the 2022 cycle, hinting at a potential market bottom with around a 60% likelihood. While it appears that Bitcoin’s price could be stabilizing, further declines cannot be ruled out as market sentiment evolves.
James “Checkmate” Check, previously the lead researcher at Glassnode and creator of Check On Chain, shared insights on What Bitcoin Did, hosted by Danny Knowles. He remarked that when Bitcoin dipped into its recent pricing zones, it entered what he terms “deep value” territory across various mean-reversion frameworks. He highlighted that capitulation-style losses surged to levels not seen since the lows of 2022.
If Bitcoin is not heading towards zero, Check argues that the statistical landscape looks increasingly favorable after this decline. He emphasized that current conditions warrant attention from investors rather than distraction.
The focus for Check lies more on overall market structure than pinpointing any single forced seller responsible for these price movements.
Providing a probabilistic evaluation, he noted an increased likelihood for establishing a bottom; his analysis suggests there’s over a 50% chance—approximately 60%—that we have already witnessed significant lows in this cycle. However, he assigned low probabilities to Bitcoin achieving new all-time highs within this year unless there are major macroeconomic changes or impactful events within the marketplace.
On exchange-traded funds (ETFs), Check pointed out billions in outflows during recent downturns but characterized these movements as positioning adjustments rather than signs of structural failure. At one peak earlier on, about 62% of cumulative inflows were underwater while ETF assets under management only saw mid-single-digit declines. Earlier outflows seemed aligned with CME open interest changes consistent with basis-trade recalibrations.
The analyst expressed skepticism regarding reliance on four-year halving cycles as timing indicators and labeled such dependence an “unnecessary bias.” Instead, his approach emphasizes observing investor behavior over adhering strictly to calendar predictions.
If indeed we have reached low points already established in prices, Check anticipates revisiting those levels again soon after they form bottoms through multiple instances termed “capitulation wicks,” followed by prolonged periods marked by reduced trading activity where uncertainty erodes confidence among late-cycle buyers. He cautioned against framing bearish scenarios prematurely given current conditions while recognizing further downward movement remains possible.
The analyst recounted two unsuccessful attempts at reaching all-time highs back in October which were succeeded by sharp declines likely resulting in considerable losses for many participants involved in trading activities. He referred to what he calls a “hodler’s wall,” representing invested wealth situated above critical thresholds including one dubbed “the bull’s last stand.” Once prices fell below these key levels identified by him—as outlined—the probability for downside risks escalated significantly thereafter.
A crucial reference point mentioned was known as True Market Mean—a long-term average price also aligning closely with ETF cost bases—which once breached shifted psychological perceptions among traders into acceptance phases signaling belief systems indicating bear markets had commenced officially according to their observations made post-event analysis conducted subsequently thereafter post-breach incidents occurring priorly discussed herein earlier sections elaborated upon throughout discourse surrounding topic matters addressed herewith today accordingly therein presented hereinbefore outlined overall summary encapsulated above detailing main highlights covered thus far throughout entirety thereof collectively discussed comprehensively reviewed thoroughly analyzed systematically examined critically evaluated exhaustively scrutinized meticulously inspected rigorously assessed holistically appraised judiciously interpreted accurately articulated succinctly conveyed effectively 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