Bitcoin’s steep selloff may have finally run its course, according to Geoffrey Kendrick, the head of digital asset analysis at Standard Chartered, who argues that the pullback is following a familiar pattern and is likely nearing exhaustion.
Bitcoin dipped below $90,000 on Tuesday, extending a pullback that has erased nearly 30% from the currency’s all-time high above $126,000 set in early October. The latest lower leg marks the deepest pullback since last year’s introduction of spot bitcoin ETFs in the US and has sparked debate over whether the biggest cryptocurrency is entering the bear market phase of its typical four-year cycle.
“I see the latest selloff as nothing more than (a quick/painful version of) the third of the last few years, of almost exactly the same magnitude,” Kendrick wrote in a Tuesday note to clients.
As part of his thesis, Kendrick highlighted sentiment and valuation metrics that have now reset to levels historically associated with market bottoms. One of them is bitcoin treasury firm Strategy’s ( MSTR ) modified net asset value (mNAV) — a measure of the firm’s bitcoin holdings relative to its share price — which has fallen to parity at 1.0.
“A number of other metrics have collapsed to absolute zero levels,” he said, suggesting seller exhaustion and capitulation. “This is enough to mean the sell-off is over.”
“A rally to the end of the year is my starting point,” he concluded.
His outlook echoed recent comments from analysts at crypto exchange Bitfinex. They noted that the pace of short-term holders’ realized losses began to slow with onchain capitulation signals emerging, typical markers of a market bottom forming.
BTC bounced back to just back $93,000 on Tuesday, up 3.8% from overnight lows.
