[Analysis] Bitcoin’s 47% Rebound Doesn’t Confirm Bottom Yet as Past Cycles Often Retested Lows

Bitcoin (BTC) has rebounded about 47% from its July low, but past market cycles suggest that may still be insufficient to confirm a bear-market bottom.

According to Binance Research’s weekly report published on October 6, Bitcoin fell to $57,800 on July 1 and then rebounded about 46.9% to $84,880 on October 1. Still, Binance Research found that four of five rebounds following corrections of a similar scale in past cycles were followed by another test of the low.

Bitcoin is currently down as much as 54.2% from its peak of $126,200 reached in October last year. That headline decline is smaller than the maximum drawdowns of 77.6% to 86.9% recorded in the previous three bear markets.

Binance Research said, however, that once volatility is taken into account, it is difficult to conclude that the current bear market has been milder than earlier ones. Bitcoin’s annualized volatility has fallen to 47% from about 99% in past cycles, while the volatility-adjusted drawdown in the current downturn stands at 1.94 standard deviations, similar to previous bear markets. “It’s not that Bitcoin is falling less, but that volatility itself is declining,” the report said.

On the macroeconomic side, the probability of an additional U.S. rate hike in October has fallen from about 70% to below 30%, but the yield on the 10-year U.S. Treasury remains near a 24-year high. Binance Research identified elevated long-term Treasury yields as a key factor constraining any further rebound in Bitcoin.

Meanwhile, net inflows into stock products on Binance totaled $163 million between September 28 and October 2, more than doubling from the previous week. Of that, $71.4 million flowed into crypto-related stocks including Circle, Strategy and BitMine, accounting for about 44% of the total.