Bitcoin is showing signs of extending its recent rebound, having achieved an 8% daily gain on Wednesday. Crypto analysts are observing indicators that suggest a local bottom may have already been established.
"The combination of extreme deleveraging, capitulation among short-term holders, and early signs of seller exhaustion has created the conditions for a stabilisation phase and a relief bounce," Bitfinex analysts stated in a report on Tuesday.
These comments preceded Bitcoin's (BTC) nearly 8% rally on Wednesday, which briefly saw it approach $94,000. At the time of publication, Bitcoin was trading at $91,440.
Bitcoin Operating on a Leaner Leverage Base
Bitfinex reported that the market is now functioning with a "leaner leverage base." This development is seen as reducing the likelihood of sudden market drawdowns driven by liquidations.
On October 10th, approximately $19 billion was removed from what many market participants described as an overleveraged market. This event triggered a broader sell-off, pushing Bitcoin and the wider cryptocurrency market into a downtrend. Bitcoin's price reached a low near $82,000 on November 21st.
"This configuration strengthens the case that the market’s remaining leverage is relatively well-contained, reducing systemic fragility and improving the prospects for a more stable consolidation phase," one analyst commented.
The price pullback, occurring late in the year followed by a rebound, has led more Bitcoin holders to question the relevance of the traditional four-year cycle. This cycle would have typically placed Bitcoin's price peak around its October all-time high of $125,100.
Bitcoin's Current Cycle Differs from Past Cycles, According to Analysts
The year-end performance for Bitcoin remains uncertain, particularly as December has historically been a slower month. Since December 2013, Bitcoin has shown an average return of just 4.69% in December.
However, recent price action has deviated from seasonal trends. November, typically Bitcoin's strongest month with an average return of 41.12%, saw a decline of 17.67% this year.
Despite these trends, some market observers believe the upward movement could continue into the following year.
Bitcoin analyst PlanC stated in an X post on Thursday, "This Bitcoin cycle is NOT like past cycles." He added, "I have been warning you all and explaining this for well over a year now. Hopefully, you were paying attention."
Similarly, Bitcoin analyst Quinten Francois commented in an X post on the same day, "Bitcoin is closer to the bottom than to the top."
Tom Lee, chair of BitMine, has expressed confidence that Bitcoin could reach $100,000 before the end of the year.