Bitcoin’s Next Big Buy Zone Revealed!

👇1-11) Yesterday, Bitcoin dropped sharply, breaking below the critical $95,000 support level. We had previously warned about this key threshold in our December 20, 2024 report (Bitcoin’s 2025 Shift: Why It’s All About Macro and Inflation Again). In that report, we highlighted a potential topping formation driven by global liquidity trends and the macro headwinds Bitcoin was facing—including a hawkish Federal Reserve and rising inflation expectations. Additionally, we outlined key dates in 2025 when Bitcoin could potentially resume its rally based on historical market cycles and liquidity shifts.

Bitcoin significant liquidation events (LHS, $ million) during the last year

👇2-11) In that report, we cautioned that MicroStrategy’s inclusion in the Nasdaq-100 could become a "sell the news" event. Despite billions of dollars in Bitcoin purchases, BTC prices failed to increase. Our October 7, 2024 report suggested that MicroStrategy shares could break above $177. Still, by December 19, 2024, in our report (Bitcoin, MicroStrategy – NOT Every Dip Presents a Buying Opportunity), we warned that new shareholders were significantly overpaying and explicitly recommended avoiding MicroStrategy.

👇3-11) At the time, MicroStrategy shares were trading at $350 (+98% from our October 19 report), compared to $250 today, marking a 29% decline. This validates our concerns about excessive valuation from our December 19 report. But when and at what level would we buy back Bitcoin? Let’s go through some numbers:

👇4-11) The fair value of MicroStrategy shares, based solely on their Bitcoin holdings, is approximately $170. When factoring in the company’s $9 billion in convertible debt, the adjusted fair value drops to $150. As our December 19 report outlined, we anticipate(d) that MicroStrategy shares will eventually revert to their fair value, aligning with their underlying asset valuation.

👇5-11) We had hoped that the positive momentum surrounding Trump’s inauguration could offset macro concerns, but the persistent decline in trading volumes and compressed funding rates limited opportunities to short-term tactical trades when the risk/reward was favorable.

Bitcoin (LHS) vs. Global Liquidity (RHS, $ trillions) - leading by 13 weeks

👇6-11) As measured by 28 central banks, global liquidity has historically led Bitcoin’s price by 13 weeks and has already signaled a correction. However, based on this indicator, Bitcoin’s downside appears limited. In a worst-case scenario, Bitcoin could drop to the $72,000–$74,000 range, where a rebound will likely occur.

👇7-11) The Short-Term Holder Realized Price—which tracks Bitcoin held for up to 155 days—indicates that short-term holders are currently in losses, potentially triggering stop-loss sales and liquidations. Historically, Bitcoin rarely trades below this level in bull markets for extended periods, whereas in bear markets, it tends to stay below it for longer durations. During the summer 2024 consolidation, Bitcoin dropped $9,616 below this metric, now at $92,800. If the 2024 consolidation pattern repeats, Bitcoin could decline to around $82,000 before stabilizing.

Bitcoin vs. ST Realized Price (stops being triggered below $92,800)

👇8-11) This explains the aggressive wave of liquidations, not only at the critical $95,000 level, which triggered the first round of selling, but also at $92,000–$93,000, leading to a further drop to $86,000. With $467 million in liquidations, this was one of the largest sell-offs in recent history.

Bitcoin tends to move in $16,000 increments - Diamond Top (report here)

👇9-11) From a technical perspective, Bitcoin has also broken down from a Diamond Top pattern, which previously signaled that a break below $95,000 could push prices toward the upper boundary of the 2024 summer range at $73,000. Notably, this $73,000 target aligns with the Broadening Ascending Wedge breakdown that we highlighted yesterday.

Bitcoin various on-chain levels

👇10-11) During Bitcoin bull markets, prices rarely dip below the True Market Mean Price—a metric that represents the ratio of realized market capitalization to active supply. Currently, this level stands at $64,300 (and rising), making it unlikely that Bitcoin would drop this low unless the True Market Mean Price trends higher, ideally toward $73,000. We still believe Bitcoin has room to climb in 2025, but for optimal reentry, we prefer levels with a "7" in front, targeting an absolute low of $73,000 and more realistically, somewhere below $80,000.

👇11-11) This could present a major buying opportunity in the coming weeks or months, but it may require the Federal Reserve to shift to a dovish stance. As we outlined in December: “Bitcoin traders will closely watch the 2025 FOMC meetings, with key dates including January 29, March 19, May 9, June 18, July 30, September 17, October 29, and December 10. While a dovish turn at the January meeting was unlikely, the earliest possible shift could come in March (optimistically), or potentially even later.”