This bitcoin bear market is different with 'uniquely pessimistic' traders limiting downside, K33 says

Bitcoin BTC$76,865.88 failing to break above its key moving average around $83,000 sparked renewed fears that another brutal leg lower is coming.

But this cycle, K33 Research argued in a Tuesday report, is behaving very differently from the crashes of 2014, 2018 and 2022 crashes that happened after similar rejections.

In those periods, bitcoin rallied aggressively back toward the 200-day moving average before quickly rolling over again. Those rebounds were fueled by rapidly rebuilding leverage and bullish positioning that eventually collapsed under their own weight.

"The current slow grind has not produced such a dynamic," wrote K33's head of research Vetle Lunde. "Derivatives data instead points to uniquely pessimistic sentiment."

Extreme caution

Bitcoin's 30-day average funding rate has now stayed negative for 81 consecutive days, nearing its record longest stretch, showing traders have consistently leaned bearish even as prices recovered from the February lows near $60,000.

Meanwhile, annualized basis on CME bitcoin futures recently dropped below 2.5%, levels typically associated with periods of extreme caution, the report said.

Still, there are warning signs, Lunde said.

Open interest across bitcoin derivatives remains elevated, raising the risk of another volatility event if prices weaken further. Meanwhile, U.S. bitcoin ETF outflows accelerated to $1.6 billion in five days as prices softened near the $83,000 area, close to the average cost basis of many bitcoin ETF holders.

K33 said that historically investors tended to sell more aggressively when prices recover back toward breakeven after prolonged drawdowns, and that pattern appears to be emerging again.

Bottom likely in

Still, K33's proprietary indicators still resemble stronger periods, like the March-April 2025 period as BTC bottomed amid Trump's tariff rollout before rallying to fresh highs, more than the bear market rallies of prior cycles.

The firm continues to view bitcoin’s February slide toward $60,000 as the likely steepest drawdown for this cycle.

"The less aggressive bull market of 2025 sets the stage for a more moderate bear market in 2026," Lunde wrote, with the firm's "base case" remaining that $60,000 in February marked the bear market's "maximum drawdown."