Bitcoin's Bear Flow: Four Scenarios from $78,688

Bitcoin is in a confirmed downtrend. The price closed January at $78,000, marking a roughly 40% decline from the cycle's all-time high of $126,000. This drop is confirmed by the January RSI reading of 49, which sits below the 50 threshold that signals a bear market.

The key support levels now define the path ahead. The primary long-term anchor is the 200-week moving average at $58,000, with the realized price providing a secondary floor at $55,000. These levels are critical reference points for the four bear-market scenarios PlanB has outlined, which range from a severe 80% drop to a shallow bounce above the prior cycle's peak.

The Four Flow Scenarios: Probable Paths and Their Implications

The current drawdown has set up four distinct bear-market paths, each with a clear price target and implied market flow. The first, a worst-case scenario, follows historical deep crashes. An 80% drop from the $126,000 peak would imply a move to roughly $25,000. This path suggests a complete capitulation, with selling pressure overwhelming all support levels.

The second scenario is more typical by PlanB's own backtests. It targets a move down to the long-term anchors of the 200-week moving average and realized price, placing a potential floor in the $50,000–$60,000 zone. This path implies a steady, structural reset where price finds equilibrium with the market's underlying cost basis.

A shallower retrace is the third possibility. Under this view, Bitcoin holds just above the prior cycle's all-time high, with a potential floor near $69,000 to $70,000. This scenario suggests the recent rally's lack of momentum has led to a more contained correction, with buyers stepping in at key psychological levels.

The final scenario is that a local bottom may already be in. PlanB noted the recent low near $72,900 could mark a local low if the bear market remains shallow. This path implies the worst of the selling is over, with the market consolidating near current levels.

Catalysts and Risks: What to Watch for the Next Flow Shift

The immediate catalyst is the flow between ETF holders and spot holders. With ETFs carrying an estimated average cost of $90,000, a break below $70,000 could trigger further selling as these investors face deeper losses. This dynamic is a primary risk for a deeper-than-expected drawdown.

Monitor the pace of the bear market. The current cycle has already lasted over a year, and historical patterns suggest a bottom could form between June and August. A faster-than-usual decline raises the chance of an earlier low, but also increases the risk of a prolonged period of selling pressure.

The catalyst for a shallower path is sustained institutional flow. If capital begins to re-enter, it could support price near current levels and validate the scenario where Bitcoin holds above the prior cycle's peak. The key risk remains a deeper capitulation, with the market's current fear and fatigue creating a vulnerability for further downside.