Bitcoin's $65K Floor: Why Crypto Bears May Be Running Out of Steam

The crypto winter might finally be thawing. After months of relentless selling pressure, Compass Point analysts are calling the bottom—or at least getting close to it. Their verdict: bitcoin's bear market is in its "final innings," with a floor likely between $60,000 and $68,000.

But there's a catch. Push bitcoin below that range, and you'd probably need something bigger than crypto drama—you'd need the entire U.S. stock market to crater.

The Numbers Behind the Call

Bitcoin recently tumbled from above $81,000 to as low as $74,532 over the weekend, testing what analysts Ed Engel and Michael Donovan describe as critical support levels. That $81,000 mark isn't random—it represents the average cost basis for both bitcoin ETF investors and the broader market.

The pain is real for ETF holders. Since January 15th, bitcoin ETFs have hemorrhaged $3 billion in net outflows. With over 50% of ETF assets now underwater, the selling pressure could persist while the $81,000-$83,000 range becomes a ceiling rather than a floor.

Here's where it gets interesting: 7% of long-term holder bitcoin (held for 6+ months) was acquired in that $60,000-$68,000 range. These aren't day traders—they're the diamond hands who've weathered previous storms and historically provide buying support during major dips.

The Air Pocket Problem

Between $70,000 and $80,000 lies what Compass Point calls an "air pocket"—a zone with virtually no structural support. Less than 1% of long-term holder supply was acquired in this range, meaning there are fewer natural buyers to step in if bitcoin falls through current levels.

If the $60,000-$68,000 support fails, the next logical stop sits around $55,000—bitcoin's average cost basis for all historical buyers. But reaching that level would likely require more than just crypto-specific headwinds.

"During the 2022 bear market, it took the combination of an equity bear market and several high-profile crypto bankruptcies to breach bitcoin's average cost basis," the analysts noted. Think FTX, Terra Luna, and a Federal Reserve hiking rates into a recession—that level of systemic stress.

Reading the Tea Leaves

Several indicators suggest the market might be finding its footing. Funding rates—the cost of holding leveraged positions—are hinting at capitulation, historically a sign that cyclical bottoms are near. Meanwhile, regulatory progress continues to inch forward, providing a more stable foundation for institutional adoption.

The ETF outflows, while painful, might also be clearing weak hands from the market. When retail investors panic-sell their ETF shares, it often marks the later stages of bear markets rather than the beginning.

But this isn't just about technical levels or funding rates. The broader macro environment matters more than ever. Bitcoin has increasingly correlated with tech stocks, meaning its fate is tied to Federal Reserve policy, inflation expectations, and overall risk appetite.

The Bigger Picture

What makes this analysis compelling isn't just the price targets—it's the framework. Compass Point is essentially arguing that bitcoin has matured enough that its major moves now require macro catalysts rather than crypto-specific events.

That's both good and bad news. Good because it means bitcoin is less vulnerable to exchange collapses or regulatory surprises. Bad because it means crypto investors now need to worry about the same things that keep stock investors up at night: recession risks, central bank policy, and geopolitical tensions.

The $65,000 level represents more than just a number—it's where conviction meets capitulation. If long-term holders start selling there, it signals something fundamental has changed in how they view bitcoin's long-term prospects.