Bitcoin Downside: Where Could This BTC Price Fall End?

Date: January 27, 2026 (Asia/Bangkok)

Bitcoin is in a rough stretch. After hitting record highs near $126,000 in late 2025, the price has slid hard—down about 25% over the last six months and trading below $88,000.

This move isn’t just a normal “crypto wobble.” The latest decline looks like a mix of (1) tighter macro conditions and risk-off sentiment, (2) fading institutional demand, and (3) technical and on-chain signals that suggest the market is still trying to figure out where solid support lives.

What’s Driving Bitcoin Lower Right Now?

1) Heavy ETF outflows are changing the game

One of the biggest differences between this cycle and older Bitcoin cycles is how much institutional flow matters now. According to Trefis’ summary of recent market conditions, U.S. spot Bitcoin ETFs saw about $4.57 billion in outflows across November–December 2025 (their worst two-month stretch on record), and the week ending January 23, 2026 brought about $1.33 billion in outflows—the largest weekly redemption since February 2025.

When ETF flows are positive, they can act like a steady “buy engine.” When flows flip negative, they can become a steady “sell pressure” source. In simple terms: if big pools of capital are pulling money out consistently, it can be hard for price to stabilize quickly—especially when traders are already nervous.

2) Technical signals: below key long-term averages

Technically, Bitcoin is trading below its 365-day moving average (near $101,000 in the Trefis analysis). It’s also been stuck in a choppy range roughly between $85,000 and $92,000, with sellers showing up on bounce attempts.

When a major asset trades below long-term trend measures, many trend-followers and systematic strategies become cautious. That can reduce the “automatic dip buying” that sometimes shows up in strong bull phases.

3) Macro pressure: Bitcoin trading like a high-beta risk asset

Another key point: Bitcoin has increasingly moved like a high-beta tech-like asset—meaning it often rises when markets feel optimistic and liquidity is plentiful, and it often drops when the mood turns defensive. Trefis notes headwinds such as a cautious Fed stance on rate cuts and a stronger dollar environment—conditions that can weigh on risk appetite.

That doesn’t mean Bitcoin has “stopped being Bitcoin.” It means the market’s biggest marginal buyers and sellers today are more connected to macro narratives than they were in early cycles. If stocks wobble, or if rates stay higher for longer, Bitcoin can wobble harder.

4) On-chain behavior: “smart money” distribution signals

Trefis also points to on-chain signals suggesting some larger, sophisticated holders—particularly wallets holding 100 to 1,000 BTC—have been exiting. The article compares this behavior to late 2021 patterns that preceded the deeper 2022 drawdown.

On-chain data isn’t a crystal ball, but it can be a valuable “market mood” indicator. If larger cohorts are selling into strength, it can suggest lower confidence in near-term upside.

How Low Can Bitcoin Go?

This is the question everyone asks when prices slide fast: “Where’s the floor?” The honest answer is that no one can pick the exact bottom in real time. But analysts often build downside zones—areas where support has historically formed or where cost-basis metrics cluster.

Base-case downside targets: $70,000 to $75,000

Trefis highlights a medium-term downside area near $70,000. This zone is psychologically important (round number) and often aligns with major support discussions in market commentary.

If Bitcoin drifts toward $70K while flows remain negative, traders will watch how price behaves: does selling slow down, do volumes stabilize, do outflows ease, and does the market stop reacting so sharply to bad news?

Deeper pullback scenario: ~$56,000

A more bearish—but still discussed—level is around $56,000, described in the Trefis analysis as Bitcoin’s realized price, a level where bear markets have historically bottomed.

Think of realized price as a rough proxy for the average “on-chain cost basis” of coins. Markets can overshoot below it briefly, but it’s often treated as a meaningful zone where long-term participants pay attention.

Tail-risk scenarios: far lower, but not the main forecast

The Trefis piece also mentions extreme scenarios cited by well-known market voices—like an 80% drawdown possibility discussed by trader Peter Brandt (implying very low levels), and a very bearish warning from Bloomberg’s Mike McGlone. Trefis frames these as tail risks—meaning they would likely require severe conditions (major policy errors, a hard economic landing, or a dramatic collapse in institutional demand).

In other words: possible, but not the default expectation.

Why the Leverage Story Still Matters (Even After a “Flush”)

Bitcoin markets can be heavily influenced by leverage—especially through perpetual futures. When prices fall, leveraged traders can get forced out, triggering liquidations that push price even lower in a cascade.

According to the Trefis analysis, the “leverage flush” in October 2025 included roughly $20 billion in liquidations, and futures open interest is down about 40% from the peak. The idea is that if the market has already de-leveraged significantly, the risk of sudden liquidation cascades may be reduced—but sensitivity to institutional flows can rise.

That creates a different market texture: fewer “blow-up” events, but also less easy fuel for sharp upside rebounds unless fresh demand returns.

Historical Parallels: What Past Drawdowns Tell Us (and What They Don’t)

One of the most helpful ways to think about Bitcoin corrections is to compare them by depth and recovery time. Trefis lays out a few key examples:

May 2021: ~50% drop, then recovery in ~6 months

Bitcoin fell roughly 50% (about $58K to $30K) amid a mix of corporate narrative shifts and regulatory/mining concerns, then recovered within about six months to new highs by November 2021.

Nov 2021 to Nov 2022: ~78% drawdown, long recovery

This was the brutal one: roughly $69K down to under $16K, with recovery taking more than two years to revisit prior highs—helped later by major catalysts like spot ETF approvals.

May to Nov 2022: another ~50% leg down inside a bigger bear market

Trefis also points to the May–Nov 2022 decline (around $32K to under $16K), showing how bear markets can come in multiple waves.

What’s the takeaway? Historically, ~40–50% corrections often recover within 6–16 months. Deep ~70–80% bear markets can take 24–28 months. Trefis suggests the current environment shares traits with both—less severe than the worst of 2022, but with institutional de-risking that feels structurally important.

What Could Trigger a Recovery?

Markets usually don’t bottom just because “enough time passes.” They often bottom when selling pressure exhausts and a believable story for stabilization shows up.

1) A macro shift: easier liquidity and a friendlier rate path

Trefis notes a possible macro turning point tied to U.S. Federal Reserve leadership timing, arguing markets may anticipate a more dovish stance after May 2026 depending on leadership and policy signals.

Whether that specific timeline plays out or not, the broader concept is familiar: Bitcoin tends to do better when liquidity expectations improve and risk appetite comes back.

2) Regulatory clarity as a confidence booster

The analysis mentions an expected policy effort described as the “Clarity Act” (early 2026) that could improve regulatory clarity and potentially unlock significant institutional participation if enacted and implemented effectively.

Regulation can sound boring, but for institutions it’s not boring at all. Clear rules can reduce compliance risk, which can reduce friction for large allocators.

3) Supply-demand structure: long-term holders and corporate buyers

Trefis argues the long-term setup still has supportive elements: long-term holders appear to have resumed accumulation after a period of distribution, and some corporate treasuries continue buying through volatility. It also notes that spot Bitcoin ETFs still attracted substantial total inflows during 2025 overall and built meaningful assets under management—creating infrastructure that could matter once flows stabilize.

Key Price Levels to Watch (Practical Map)

Here’s a simple “map” that matches the narrative above—useful for understanding what markets are reacting to. This is not a prediction; it’s a framework.

Near-term resistance: ~$92,000 and ~$101,000

Bitcoin has struggled to hold rallies above the low $90Ks, and the 365-day moving average zone around ~$101,000 is highlighted as a major long-term trend marker in the analysis.

Near-term support: mid-$80,000s

The $85K area is repeatedly referenced as part of the current trading range, and it’s also close to a “cost basis” support level discussed for ETF investors (average cost basis around $84,099 in the Trefis view).

Next major support: $70,000–$75,000

If downside continues, this is the “next big zone” highlighted as a more realistic target than ultra-extreme crash calls.

Deep support zone: ~$56,000

This is presented as a historically meaningful bear-market area (realized price) that could come into play if conditions worsen materially.

What This Means for Investors (Without the Hype)

It’s tempting to treat Bitcoin moves like a movie plot: villains (macros), heroes (ETFs), dramatic twist endings (liquidations), and then a victory rally. Real markets are messier.

Here’s the grounded view:

• Institutional flows matter more than ever. ETFs can amplify moves in both directions.
• Macro is still the weather system. Bitcoin can rally against the wind, but it’s harder.
• Technical and on-chain signals are warnings, not guarantees. They help you manage risk, not predict the future perfectly.
• Multiple downside zones exist. $70K–$75K is a commonly discussed “next stop,” while $56K is a deeper historical line.

Risk note: Crypto prices are volatile and can change quickly. This article is for information only and is not financial advice.

FAQ

1) Why is Bitcoin falling even after ETFs were approved?

ETF approval helped legitimize access and brought large inflows at times, but flows can reverse. Recent data cited in market commentary points to significant ETF outflows, which can add steady sell pressure.

2) What are the most important support levels right now?

Based on the analysis discussed, traders focus on the mid-$80Ks (current range support), then $70K–$75K as a larger downside target, and ~$56K as a deeper historical “realized price” zone.

3) Could Bitcoin really drop below $50,000 again?

Some commentators mention extreme tail-risk scenarios, but the referenced analysis frames sub-$50K outcomes as low-probability events that would likely require severe macro or institutional shocks.

4) What role do liquidations play in big drops?

Leverage can accelerate declines when forced liquidations cascade. The analysis notes a major liquidation event in late 2025 and suggests deleveraging may be more advanced now, which can change how future moves behave.

5) What would make Bitcoin recover faster?

A shift toward easier macro conditions (more liquidity, clearer rate-cut expectations), stabilizing or positive ETF flows, and clearer regulation are commonly cited catalysts.

6) Is Bitcoin still behaving like “digital gold”?

In the short term, the analysis argues Bitcoin has been trading more like a high-beta risk asset—moving with broader risk sentiment rather than acting as a stable haven.

Conclusion: Where Could This Fall End?

The most realistic path described in the market analysis is that Bitcoin’s downside risk may not be finished yet, with the next major zone around $70,000–$75,000 if selling pressure and ETF outflows continue. A deeper slide toward $56,000 is possible in a more bearish scenario, while ultra-low crash targets are treated as tail risks rather than the base case.

For a true bottom to form, the market likely needs a combination of: (1) exhausted selling, (2) stabilizing institutional flows, and (3) a believable macro or regulatory catalyst that restores confidence. Until then, Bitcoin may remain a headline magnet—volatile, emotional, and tightly linked to the flow of big money.

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