Bitcoin: Broken, Or Bottoming?
Bitcoin: Broken, Or Bottoming?
Bitcoin's latest collapse has broken more than just technical support. The dollar debasement narrative has stopped helping, the relationship with tech has fractured, and even falling volatility is no longer providing relief. Yet as Bitcoin approaches several major long-term support levels, the setup is becoming more interesting than the headlines suggest.
BTC blues
We are running out of bearish superlatives for Bitcoin. The crypto has broken decisively below the 200-day moving average, but it is now testing a long-term trendline that has been intact since 2023. It is also approaching key psychological levels from both 2021 and 2024 that have repeatedly acted as major support and resistance.
Despite the recent carnage, this cycle still hasn't matched previous bear markets. Bitcoin is down 53% from its October 2025 peak, compared with a 77% drawdown during the 2021-22 bear market.
Prediction markets are pricing a 66% probability of a revisit to the $50k level.
Source: LSEG Workspace
Weekly
Bitcoin is also trading below its 200-week moving average. While that has historically been a bearish development, previous breaks below this level have ultimately marked important long-term lows. Weekly RSI is deeply oversold at 31, although it remains above the February low.
Source: LSEG Workspace
The dollar connection
Many investors continue to buy Bitcoin based on the dollar debasement thesis. But one thing is clear: even for believers in that narrative, the dollar hasn't been Bitcoin's friend lately. The latest leg lower in Bitcoin began almost exactly as the dollar started to rally.
Source: LSEG Workspace
The tech connection
For years, Bitcoin behaved like a leveraged version of tech. That correlation has deteriorated sharply, and the divergence between Bitcoin and the Nasdaq has rarely been this large. Either Bitcoin has more catching up to do, or one of the two markets is sending the wrong signal.
Source: LSEG Workspace
The psychology of manias
There is little fundamental relationship between Bitcoin and silver, yet the two have traded remarkably closely since the silver bubble burst. Manias are often driven by the same investor psychology, both on the way up and on the way down.
When speculative psychology turns, assets with little in common fundamentally can trade remarkably alike. The question is whether silver is telling us where Bitcoin is headed next, or vice versa.
Source: LSEG Workspace
Fear hedge fallacy
If there is one myth worth putting to rest, it's that Bitcoin is a fear hedge. History shows the opposite. Major VIX spikes have consistently coincided with Bitcoin selloffs. Even more worrying for the bulls, Bitcoin has recently continued to fall despite volatility easing, a sign that the usual "risk-on" tailwind isn't providing much support.
Source: LSEG Workspace
A possible catalyst
South Korean retail speculation was once a major force behind Bitcoin rallies. Today, those same investors appear far more interested in chasing the KOSPI, particularly AI favorites such as SK Hynix and Samsung.
Should that equity momentum begin to fade, Bitcoin could once again emerge as a destination for speculative capital. It's far from our base case, but South Korean retail has repeatedly played an outsized role in previous Bitcoin cycles. A reversal in the KOSPI is therefore one of the more interesting catalysts we're watching.
