"Improving macro conditions, but technical damage and positioning still point to a fragile structure."
Bitcoin has broken below the key support level identified in our prior reports. As outlined consistently since our bear market confirmation call, the loss of this level reinforces the view that the current downtrend remains intact. In a bear market, rallies—regardless of their magnitude—tend to be counter-trend moves, not structural reversals.
Improved macro conditions may create temporary optimism, but the technical and positioning backdrop continues to suggest that any relief rallies are more likely to be pauses within a broader downtrend rather than the start of a sustained recovery.
Short-Term Rebounds May Occur — But the Trend Remains Down
With Bitcoin now in oversold territory on shorter timeframes, a short-term bounce is possible. Indeed, macro conditions have shown signs of improvement in recent weeks, with modestly improving global liquidity conditions and reduced fears of a U.S. recession. These factors may support a temporary recovery.
However, short-term rallies in a confirmed bear market should be viewed cautiously. In past bear market phases, Bitcoin frequently produced sharp but short-lived bounces that retraced 20–40% of the prior decline before resuming the broader downtrend. These counter-trend moves can be powerful enough to create the illusion of a bottom, but without structural confirmation, they typically fail to hold.
Technical Damage Is Extensive — Structure Remains Fragile
The break below key support has inflicted significant technical damage on Bitcoin's market structure. From a chart perspective, the former support zone—now turned resistance—sits meaningfully above current price levels, creating a ceiling that will likely cap any near-term recovery attempts.
More importantly, the weekly and monthly technical indicators continue to deteriorate. The monthly stochastic oscillator remains in a declining trajectory and has not yet reached the deeply oversold levels (below 15%) historically associated with durable cycle lows. Until these thresholds are reached and a confirmed reversal occurs, the risk of further downside remains elevated.
ETF Positioning Adds Another Layer of Risk
ETF flows represent an additional vulnerability in the current environment. After accumulating significant positions during the bull market phase, ETF holders now face unrealized losses as Bitcoin trades below several key cost-basis levels. If selling pressure from ETF outflows accelerates, it could amplify the current downtrend and push prices toward lower support zones more quickly than the market currently anticipates.
In summary, while short-term rebounds may occur—supported by oversold conditions and improving macro factors—the broader bear market structure remains intact. Technical damage is extensive, key reversal signals have not yet been triggered, and positioning risks from ETF holders add fragility. Until a confirmed bottoming signal emerges from our cycle framework, rallies should be treated as opportunities to reassess risk rather than signals of a new uptrend.
