Is BTC Repeating Its 2020 Playbook—or Heading for One More Flush?

Bitcoin’s sharp late-January sell-off has intensified debate over whether the market is approaching a cyclical bottom—or merely entering the next leg lower.

According to Galaxy Digital’s head of research, Alex Thorn, recent price action suggests downside risks remain elevated, with Bitcoin potentially drifting toward long-term technical support levels in the weeks or months ahead.

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Galaxy Digital Warns Bitcoin Could Drift Toward Long-Term Support Near $58,000

In a research note sent to Galaxy clients, Thorn said the Bitcoin price is likely to drift lower, towards $70,000, then potentially down to the 200w MA (approximately $60,000) over the next weeks or months.

Bitcoin fell roughly 15% between January 28 and January 31, with a 10% drop on Saturday alone triggering more than $2 billion in long liquidations across derivatives venues. Notably, this was one of the largest liquidation events on record.

Prices briefly slipped as low as $75,644 on the Coinbase exchange, pushing Bitcoin nearly 10% below the average cost basis of US spot Bitcoin ETFs, estimated at around $84,000.

At one point, BTC also dipped below Strategy’s average purchase price near $76,000 and approached its April 2025 “Tariff Tantrum” low.

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The drawdown has left a growing share of investors underwater. Thorn noted that roughly 46% of Bitcoin’s circulating supply is now held at a loss, a level historically associated with late-stage bear markets.

On-chain data also reveals a thin ownership zone between $70,000 and $80,000, an area Thorn says could increase the likelihood of further downside as demand is tested.

He added that the realized price, currently near $56,000, and the 200-week moving average around $58,000 have historically converged near cycle bottoms.

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Bitcoin’s Macro Narrative Weakens as Gold Leads, but Rotation Hopes Emerge

Macro dynamics are also weighing on sentiment. Bitcoin has failed to rally alongside gold and silver amid heightened geopolitical and economic uncertainty. This undermines its narrative as a debasement hedge.

As commodities attracted safe-haven flows, Bitcoin instead lagged, an unusual divergence that Thorn says has “worked against” the asset’s narrative.

Still, not all signals point decisively lower. While whale accumulation remains muted, long-term holder profit-taking, which averaged roughly $500 million per day through 2025, has begun to abate. Historically, a slowdown in long-term holder selling has coincided with market bottoms.

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Meanwhile, some market watchers see potential parallels with 2020. Bull Theory pointed to August of that year, when gold topped before capital rotated into risk assets, fueling Bitcoin’s explosive rally into 2021.

With the ISM index again above 50, signaling economic expansion, and gold recently pulling back sharply, the firm argued that “we could now see a rotation into risk-on assets over the coming months.”

While Galaxy Digital sees limited evidence of a definitive bottom, the firm argues that if Bitcoin revisits its realized price or 200-week moving average, those levels could once again act as a long-term safety net—just as they have in past cycles.