Analyst says Bitcoin may not have bottomed, with $40K still on the table as demand stays weak
Bitcoin just bounced about 10% and climbed back above its 200-day moving average. Good tape action. Not enough. Mike, an analyst at The DeFi Report, is not ready to call a bottom, and I think that hesitation is the right read here. He says it is “too early” to confirm a turn and puts the odds of another lower low below $58,000 at 65%.
His biggest concern is capitulation. Most market-bottom takes start with price. That is only half right. Mike is looking at who actually gave up. In past Bitcoin bottoms, buyers who piled in near the top usually had to sell in large numbers before the market could reset. His “coin rotation” work, which he discussed in his latest video, shows that only 51% of investors who bought Bitcoin in the $108,000 to $126,000 range have sold. For the next peak group, the $92,000 to $108,000 buyers, only 17% have rotated out. That still looks too comfortable to him. In 2022, at least half of peak buyers had sold by the bear market bottom. This time, the pain may not have gone far enough.
Demand is the cleaner tell, and it is not helping the bullish case. Mike says spot trading volume is at its lowest level of the cycle, while spot Bitcoin ETF inflows have been near zero for roughly two months. Why does this matter? Because a real bottom usually needs fresh buyers, not just fewer sellers. That is the piece I would watch first. If buyers are really coming back, volume should start saying so. Mike wants to see more on-chain trading and more coins changing hands before he calls this a real bottom.
The market mood got worse after MicroStrategy founder Michael Saylor sold $216 million worth of Bitcoin. I’ll be honest: that headline lands badly, even if the mechanics are less dramatic than the reaction. Mike criticized the sale, though he said it was a capital management issue for MicroStrategy shareholders, not a threat to Bitcoin itself. Still, the optics are bad. When one of Bitcoin’s loudest believers sells, even for corporate reasons, people notice. In a weak market, that kind of headline hits harder.
Regulation is not giving traders much comfort either. Polymarket odds for the Clarity Act passing Congress this year have fallen from more than 75% to about 40%. TDR says crypto prices could come under pressure in the short term if Congress makes little progress before its August recess. Is that overkill? Not if traders are already nervous and liquidity is thin. If Democrats take control of the House in the midterm election, TDR says the bill could face a reset, leaving the market stuck with uncertainty for longer.
Mike also points to earlier Bitcoin cycles, when prices fell 68% to 75% from peak to trough. By that measure, a drop toward $40,000 would not shock him. Ugly, yes. Strange for Bitcoin, no. My take: this is where bulls get too casual. Yes, this contradicts the relief-rally mood from the first paragraph, but bear with me. A 10% bounce can be tradable and still fail as a cycle turn. His view is plain enough: this rally may be a dead cat bounce, not the start of a real recovery. He still gives a 65% chance that Bitcoin breaks below $58,000.
What this means
The current move higher looks more like a relief rally than a clean end to the bear market. Peak buyers have not fully capitulated. Spot volume is weak. ETF inflows have gone flat. That is not the setup most traders want before calling a durable bottom. Bitcoin could still slide toward $40,000, which would hurt long-term buyers trying to time an entry and could wipe out traders using too much leverage.
For now, the useful signals are specific: on-chain volume and TDR’s coin rotation data. Spot Bitcoin ETF inflows deserve their own line because they have been near zero for roughly two months. The Clarity Act matters too, especially if Congress leaves for its August recess without real progress. Counter to the usual advice, I would not treat one strong green candle as confirmation here. A steady rise in ETF inflows would be one of the cleaner signs that institutional buyers are returning. Until then, caution makes sense. This market has bounced, but it has not proved much.