'Analysts Suggest the Bitcoin Market Reflects FTX Lows, Indicating the Hardest Times Are Over'

Analysts Suggest Bitcoin May Be Reaching a Turning Point

Despite facing considerable downward pressure in recent months, Bitcoin could be nearing a stabilization phase, according to experts at the crypto research and brokerage firm K33. They point to emerging signs that the digital currency might be forming a bottom, even as global tensions persist.

As the conflict between the U.S., Israel, and Iran entered its fifth day, K33 analysts noted in a recent report that Bitcoin has demonstrated relative steadiness. This led them to believe that the most severe selling phase may have already passed, following a prolonged period of price declines.

"The hardest part appears to be over; now it's a matter of waiting," the analysts commented. "Historically, Bitcoin's bottoming processes have unfolded slowly, requiring patience from investors."

At the time of their analysis, Bitcoin was trading near $73,036, reflecting a daily gain of over 7%, as reported by CoinGecko. However, it still remained 42% below its record high of $126,000 reached in October.

Technical Indicators and Market Signals

Vetle Lunde, K33's Head of Research, highlighted that Bitcoin's weekly relative strength index (RSI) dropped to 26.84 last week—the lowest since July 2022. This metric, which measures the speed and extent of price movements, indicated oversold conditions similar to those seen during a wave of collapses among crypto lenders that year.

These failures were followed by the downfall of the FTX exchange, which marked the lowest point for Bitcoin in 2022. Lunde observed that, as Bitcoin's value declined in recent weeks, trading volumes on consecutive days surpassed 95% of historical records. Such high activity during bear markets has only occurred once before—when FTX declared bankruptcy.

Additionally, Lunde pointed out that in the derivatives market, traders have been willing to pay significant premiums for bearish positions, particularly in perpetual futures contracts, as a hedge against further declines. These contracts are designed to keep their prices closely aligned with Bitcoin through regular payments.

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Options Market and Investor Sentiment

When examining the options market, Lunde noted that the difference in cost between bearish "puts" and bullish "calls"—known as skew—has surged to levels only seen during major market crashes in 2022, such as the FTX collapse and the Terra implosion. He described these "extreme stress signals" as potentially positive indicators that a market bottom could be forming.

The K33 report cautioned that no single indicator is infallible. However, historical trends suggest that when the majority of traders bet heavily in one direction, Bitcoin often moves in the opposite way.

Market Behavior Compared to Previous Downturns

In a conversation with Decrypt, Lunde reiterated this perspective, noting that the recent sell-off has been relatively controlled compared to the turmoil that shook crypto markets in previous years. Still, he characterized the current defensive stance among investors as unusual.

"Historically, such behavior has coincided with global market bottoms," Lunde told Decrypt. "Bitcoin often surprises the market by defying expectations."