Bitcoin's steepest correction since the last bear market may be ending, with K33 Research pointing to December as a potential turning point for the cryptocurrency.
Analyst Vetle Lunde stated that the firm observes more evidence supporting a rebound than another collapse. Bitcoin has experienced a significant drop in recent weeks, weighed down by structural selling pressure that altered market dynamics.
Market Dynamics and Investor Hesitation
Spot Bitcoin exchange-traded funds, which had previously been the market's largest buyers, transitioned to net sellers during November. Activity in CME futures declined to a multi-year low, indicating hesitation from traditional finance participants. Bitcoin's performance has lagged behind equities, reaching its weakest level against the Nasdaq since late 2024.
K33 Research's Analysis: Overreaction and Near-Term Signals
K33 argues that the market is overreacting to distant threats while overlooking near-term indicators of strength. The firm posits that the case for material upside is considerably more plausible than a repeat of an 80% drawdown. Bitcoin is currently trading near strong historical support levels situated between $70,000 and $80,000, while overall positioning in futures remains cautious rather than overheated.
Reduced Risk of Cascading Selling
Perpetual markets are exhibiting low leverage, and major liquidations have not occurred despite sustained price pressure. K33 observes that positioning data suggests traders are not overly extended, which in turn reduces the risk of cascading forced selling.
Addressing Long-Term Concerns
Long-term concerns, such as quantum computing risks, potential Bitcoin sales by Strategy, or instability at Tether, may sound alarming but are unlikely to materialize in the immediate future. K33 emphasized that each of these potential threats is years away from posing a real risk and should not be influencing current price movements.
Focus on Near-Term Catalysts
The firm believes the focus should shift to upcoming developments in the near term. Supportive policy changes are anticipated, including the potential for 401(k) access to crypto and a pro-crypto shift within the Federal Reserve. K33 foresees structural upside building as these developments approach.
Current Valuation and Market Sentiment
According to the research firm, Bitcoin's current valuation reflects fear more than fundamental conditions. This disconnect between price action and underlying market conditions suggests that the market is pricing in worst-case scenarios that may not ultimately occur.
Outlook for December and Early 2026
For the present, the market remains cautious as participants evaluate whether the correction has concluded. K33's outlook suggests that December may present an opportune window for positioning ahead of potential policy catalysts and improved sentiment expected in early 2026.