Bitcoin Faces Final Capitulation Risk: Could $40,000 Be Next?

Bitcoin (BTC) dipped below $70,000 this week, with Ethereum (ETH) dropping 4% and XRP (XRP) hovering around $1. Benjamin Cowen, in his latest Into The Cryptoverse analysis, suggests the cryptocurrency may be entering its final bear-market phase after U.S. midterm elections. Cowen cites historical patterns from 2014, 2018, and 2022, where Bitcoin experienced significant sell-offs before reaching a cycle bottom.

He believes the current decline could mirror these trends, potentially bottoming out in December or early January. Cowen points out that Bitcoin's inability to maintain $83,000 on weekly closes indicates the earlier breakout was likely a false signal, not the start of a new bull market. He warns that Bitcoin's 200-week moving average might break, potentially leading to a 30% drop, similar to declines in 2015 and 2020, bringing prices down to around $40,000.

Cowen identifies several indicators suggesting the bear-market reset isn't complete: Bitcoin's price is still above its aggregate cost basis, the MVRV Z-score is above zero, on-chain risk is near historical lows, and social risk is at late-2018 levels. He suggests the Fed's December meeting could be a key trigger for Bitcoin's final capitulation, drawing comparisons to its 2018 cycle bottom.

A hawkish Fed stance might lead to further selling, potentially resetting on-chain valuations and setting the stage for a stronger recovery in 2027. If the market instead forms a higher low, it could leave unresolved market excesses, raising the risk of another downturn around August or September 2027. Holding the 200-week moving average through year-end might bolster the bullish outlook.