Bitcoin staged a modest recovery on Tuesday, climbing back above $78,000 after a brutal week that saw the world's largest cryptocurrency plunge 12% and briefly touch $74,876—its lowest level since April 2025. But behind the chaos, a growing chorus of Wall Street analysts sees the current selloff as the dying gasps of a bear market rather than the harbinger of deeper losses.

Compass Point analysts issued a research note declaring that the crypto bear market is in its "final innings," projecting that Bitcoin will likely bottom somewhere between $60,000 and $68,000 absent a broader collapse in U.S. equities. The call provides a rare note of measured optimism amid widespread panic selling.

The $70K-$80K 'Air Pocket'

Central to the Compass Point thesis is an analysis of Bitcoin's holder structure that reveals a concerning—but ultimately transitional—dynamic in current price levels. The analysts describe the $70,000 to $80,000 range as an "air pocket" with limited structural buying support.

Unlike price levels around $65,000, where long-term holders accumulated significant positions during the 2024 consolidation phase, the $70,000-$80,000 band is populated primarily by recent buyers who are now facing losses and may be inclined to sell on any meaningful bounce.

"The air pocket between $70K and $80K explains the velocity of this decline. There simply isn't the same density of committed holders ready to absorb selling pressure at these levels. Once we reach the $60K-$65K zone, that changes dramatically."

— Compass Point Research Note

ETF Holders Under Water

Adding to near-term pressure, the Compass Point analysts note that more than 50% of Bitcoin ETF assets under management are now underwater—meaning investors who purchased shares after the January 2024 ETF launches are sitting on losses. This creates overhang risk as frustrated retail and institutional holders may capitulate.

Since January 15, Bitcoin ETFs have recorded approximately $3 billion in net outflows, reversing months of steady accumulation. The analysts project that outflows may remain elevated while Bitcoin trades below the $81,000-$83,000 zone, which has now become overhead resistance.

What Triggered the Crash

Bitcoin's decline intensified over the weekend in conjunction with broader risk-off sentiment triggered by the historic collapse in precious metals. Gold and silver's "February Massacre"—with silver plunging 30% in a single session—rippled across all speculative assets as leveraged traders were forced to liquidate positions to meet margin calls.

On Saturday alone, cryptocurrency liquidations totaled $2.56 billion, making it the 10th-largest single-day event in crypto history. The forced selling created a cascade effect as automated stop-losses triggered additional waves of selling.

The Macro Backdrop

Beyond technical factors, Bitcoin faces headwinds from a shifting macroeconomic environment. Treasury yields have surged following strong manufacturing data, with the 30-year approaching 5%. Higher risk-free rates traditionally pressure speculative assets by raising the opportunity cost of holding non-yielding investments like cryptocurrencies.

The nomination of Kevin Warsh as the next Federal Reserve chair has also contributed to dollar strength, which historically correlates with crypto weakness. Warsh's hawkish reputation suggests monetary policy may remain tighter for longer than previously anticipated.

Long-Term Holder Conviction Intact

Despite the near-term pain, on-chain metrics suggest that long-term Bitcoin holders remain committed. Wallet addresses that have held Bitcoin for more than one year continue to accumulate, a pattern that has historically preceded major price recoveries.

This divergence between short-term panic and long-term conviction is precisely why Compass Point characterizes the current market as late-stage bear rather than early-stage collapse. The analysts note that previous bear markets have ended when short-term speculators capitulate while long-term holders absorb their selling.

Price Targets and Scenarios

Looking ahead, Compass Point outlines two primary scenarios:

  • Base case ($60K-$68K bottom): In the absence of a U.S. equity bear market, Bitcoin finds support as long-term holders step in to buy the dip. Recovery toward $100,000+ resumes in the second half of 2026.
  • Bear case (below $60K): If U.S. equities enter a sustained decline, correlations could drag Bitcoin lower. In this scenario, the 2024 lows around $50,000 become possible, though the analysts assign low probability to this outcome.

What to Watch

For investors trying to time a potential bottom, several indicators merit close attention:

  • ETF flows: A return to consistent inflows would signal renewed institutional interest
  • Funding rates: Currently negative, suggesting bears are paying to hold short positions. A normalization could signal capitulation
  • Long-term holder behavior: Any sign of selling from wallets holding more than one year would be a significant negative
  • Correlation with equities: If Bitcoin can decouple from stock market weakness, it would suggest crypto-specific dynamics are driving price

After four consecutive monthly declines—a streak not seen since the pandemic—Bitcoin clearly has work to do to restore confidence. But for patient investors with strong stomachs, the Compass Point analysis suggests the worst may soon be over.