Where bitcoin is likely to bottom (and how bad this drop can get)

Bitcoin is drifting lower, altcoins are getting hammered, and sentiment is quickly turning from euphoria to despair. The big question on everyone’s mind: where does bitcoin finally bottom, and what happens to the rest of the market if the selloff continues?

How traders are pricing in the bitcoin bottom

Market expectations are already shifting toward deeper downside. In one recent poll, most respondents expected bitcoin to bottom somewhere between $40,000 and $60,000, with a smaller but notable group eyeing the $30,000–$40,000 range and even the $20,000–$30,000 zone.

Prediction markets tell a similar story. Bettors are assigning roughly a 30% probability that bitcoin trades below $40,000 and a majority probability that it falls below $50,000. That lines up with what we’re seeing on-chain and in derivatives: longs are being flushed, liquidations are heavy, and leverage is being forced out of the system.

For many holders who bought late or over-leveraged during the run-up, this is where real pain begins. But for patient buyers, this phase is often where the best long-term entries eventually emerge.

The macro backdrop: stocks stretched, dollar pressing higher

Crypto doesn’t trade in a vacuum. The recent move in traditional markets is critical context for what happens next in bitcoin.

Major US indices like the Nasdaq and S&P 500 have been on an extended up-only run, triggering exhaustion signals such as TD Sequential 9 counts and pushing Bollinger Band metrics into overextended territory. While a trend can always stretch further than expected, this is the kind of zone where a pause or pullback becomes more likely than a fresh vertical leg higher.

At the same time, the US dollar index (DXY) is grinding up toward a key resistance area it has tested multiple times. Each test weakens that resistance, increasing the odds of a breakout. A decisive dollar breakout typically puts pressure on risk assets across the board—stocks, bitcoin, and altcoins alike.

Upcoming macro data like non-farm payrolls and unemployment figures can easily act as catalysts. If the stock market finally corrects while the dollar breaks higher, it would likely accelerate downside in crypto and push bitcoin closer to its deeper support zones. For more on how fear and macro stress can drive bitcoin lower, see this breakdown of why bitcoin is getting crushed by fear and what might come next.

Bitcoin cycle structure and realistic downside targets

To understand where bitcoin might bottom, it helps to zoom out and look at past cycles. Historically, once a cycle top is confirmed, price tends to retrace into specific Fibonacci zones measured from the cycle low to the cycle high.

In previous cycles, bitcoin has often bottomed between the 78.6% and 88.6% Fibonacci retracement levels of that full move. Applied to the current cycle, that zone roughly corresponds to the $28,000–$39,000 range.

From that, you can think in terms of scenarios:

Base case: the mid-$40k to low-$40k region

A more conservative base case is that bitcoin finds a strong low somewhere around $40,000. This area lines up with multiple technical confluences, including key Fibonacci levels and prior support/resistance flips. It’s also close to where many traders expect a bottom, based on polls and prediction markets.

If bitcoin can hold that region and build a sideways trading range, it could begin a long reaccumulation phase. In that kind of environment, you rarely buy the exact tick bottom, but you often get weeks or months to accumulate near the lows as price chops sideways.

Bear case: a deeper flush into the high-$20k to high-$30k zone

The more aggressive bear case is a full test of that historical retracement band between roughly $28,000 and $39,000. That could be triggered by a major macro shock or a crypto-specific event—think of how the FTX collapse drove the final leg of the last bear market.

In that scenario, a sharp wick into the high-$20k region would likely be met with very heavy buying, at least for a powerful technical bounce. Even if you believe in a worst-case outcome for bitcoin, such a move would almost certainly produce a violent short-term reversal.

Timing-wise, if bitcoin continues to follow the path of prior deep drawdowns (like the 2014–2015 bear), there is room for another couple of months of grinding downside before a meaningful low. That lines up with seasonality: August, September, and October are historically weak months for equities, which could dovetail with a crypto capitulation window.

Why volume and USDT dominance matter for spotting the bottom

Price alone doesn’t tell the full story. Volume and stablecoin dominance are two of the most useful tools for judging when a downtrend is getting exhausted.

In a strong downtrend, you typically see selling days accompanied by rising volume, while bounce days see weaker volume. That pattern tells you bears remain in control. Right now, bitcoin’s daily volume has been relatively muted on rallies and stronger on selloffs, which has been a clear warning not to trust short-lived pumps.

What you want to see near a true bottom is a final selloff met with a spike in volume—evidence that capitulation is being absorbed by strong hands. That’s what marked the reaccumulation zone in previous cycles.

USDT dominance (the share of the crypto market held in Tether) is another key signal. A breakout in USDT dominance above its long-term range highs usually means traders are fleeing into stablecoins, adding pressure to crypto prices. If that breakout later turns into a deviation—where dominance spikes above resistance and then quickly falls back inside the range—it often coincides with a major low in bitcoin, as sidelined capital starts rotating back into risk.

Right now, USDT dominance is pressing against a critical resistance area. A strong weekly close above that level would argue for more downside in bitcoin, potentially toward the mid-$40k or even $40k–$30k zones. A failed breakout, on the other hand, could signal that the worst of the panic is passing.

Altcoin carnage: what the selloff is telling you

While bitcoin has been grinding lower, many altcoins are already in full capitulation mode. That’s typical late-cycle behavior: liquidity drains from speculative assets first, and the weakest projects often retrace their entire prior pumps.

Examples across the market include:

• Zcash (ZEC): down nearly 50% from recent highs, retracing its entire parabolic move and threatening to revisit much lower levels.

• NEAR, Sui, and other high-flyers: breaking key higher lows on the yearly chart and approaching or making new lows.

• Cardano (ADA): printing fresh lows and effectively unwinding years of gains, signaling deep structural weakness.

• AVAX and others: already fully retracing their last major pumps and trading below those origin levels.

This kind of across-the-board damage is exactly what you expect late in a bear phase or mid-cycle reset. Many altcoins will never reclaim their old highs. Some will effectively go to zero in real terms, even if they continue trading.

For long-term investors, that means being extremely selective. Focus on projects with real adoption, strong balance sheets, and clear product-market fit. Avoid assuming that every coin that fell 80–90% is automatically a bargain—many of them are simply on a long path to irrelevance.

Zcash’s critical bug and the risk of protocol failure

Zcash deserves special mention because its recent collapse wasn’t just about market sentiment—it was also about protocol risk.

A critical bug was discovered in Zcash’s Orchard pool that could have allowed attackers to create unlimited coins. Although the issue was found and disclosed, the mere existence of such a flaw was enough to shatter confidence for some large holders. Prominent whales reportedly dumped their ZEC after the discovery, contributing to the brutal price action.

Technically, the chart now shows a classic “complacency bounce” pattern: an abnormal pump, followed by a complete retrace back to and through the origin of the move. In many altcoins, that kind of move often ends with price revisiting much lower historical levels as the market reassesses long-term value.

The lesson here is simple: protocol risk is real. Bugs that undermine the monetary integrity of a coin—like the possibility of infinite minting—can permanently damage trust, regardless of how attractive the chart looked on the way up.

Other privacy coins: Monero and the fading narrative

Other privacy-focused coins aren’t immune either. Monero (XMR) has been trading in a large range and recently rejected from the range high, now drifting back toward mid-range support. If that mid-range fails, a move toward the lower part of the range (around the high double-digits) becomes more likely.

Structurally, each higher low in a trend becomes a psychological line in the sand for holders. When those levels start breaking one after another, you often see a cascading effect as traders finally capitulate at break-even or small losses, driving price back toward the origin of the entire move.

More broadly, the once-hot privacy narrative has cooled significantly. Regulatory pressure, lack of mainstream adoption, and better compliance tooling have all made it harder for privacy coins to sustain strong bull trends, especially compared to more general-purpose platforms and infrastructure plays.

Major altcoins: ETH, Solana, XRP and others under pressure

It’s not just smaller caps suffering. Large-cap altcoins are also under heavy pressure, and their charts are starting to show the same kind of structural damage.

Ethereum (ETH)

ETH is closing in on a key support box that many wrote off as unrealistic just a few months ago. On the weekly chart, the trend is clearly deteriorating: lower highs are forming, and major trendlines are at risk of breaking.

If ETH loses its current support structure and fails to attract strong demand, a sweep of the prior cycle lows—potentially even into the high-$800s—is not out of the question over the coming months. That would effectively unwind the entire move from early 2021 and reset the market for a fresh long-term accumulation phase.

Solana (SOL)

Solana has already broken down from its consolidation and is heading toward the next major support area just under $50. If the broader market continues to weaken, a deeper test of lower zones (including prior consolidation areas much further below) becomes possible, even if that isn’t the base case yet.

XRP, AVAX, and others

XRP has already reached one major downside target and still has room to fall toward the low-$0.60s if the full retrace of its last big pump completes. AVAX has already gone beyond a full retrace, trading below the origin of its last major rally, which is a classic sign of a broken trend.

Across the board, the message is consistent: in a true risk-off phase, altcoins bleed harder than bitcoin. Many will revisit or break prior lows, and only a handful will emerge stronger in the next cycle. For more on how large institutional players are navigating this environment, see our explainer on Michael Saylor, MicroStrategy, and their multi-billion dollar bitcoin drawdown.

How to navigate the coming months

If the market continues to follow the current trajectory, the next phase is likely to be a mix of further downside and extended sideways action—a classic reaccumulation environment.

Here are some practical principles for navigating it:

• Don’t rush to catch the exact bottom. True bottoms usually form over weeks or months, not in a single candle. A well-defined range with rising volume on selloffs is often a safer place to build positions than trying to nail the lowest tick.

• Watch volume and stablecoin dominance. A final spike in selling volume combined with a blow-off in USDT dominance that quickly reverses can be a strong bottom signal.

• Respect the macro trend. If stocks and the dollar are signaling risk-off, it’s dangerous to bet aggressively against that backdrop. Wait for clear signs of stabilization.

• Be selective with altcoins. Many will never recover. Focus on assets with real usage, strong teams, and clear narratives that can survive a prolonged downturn.

• Manage risk first. Cutting losers, avoiding excessive leverage, and keeping dry powder in stablecoins can make the difference between being forced out at the bottom and being ready to buy when the opportunity finally appears.

The current phase is painful, but it’s also where the next cycle’s best entries are usually born. By understanding realistic downside targets, watching the right indicators, and staying patient, you can turn this drawdown into a long-term opportunity instead of a permanent setback.