Bitcoin faces up to 20% further downside from current levels, with the long-term holder cost basis near $48,000 serving as the worst-case floor, according to Bitwise Head of Research Europe André Dragosch. The projection comes as the cryptocurrency market navigates recent sell-offs driven by substantial ETP outflows, raising concerns about a deeper correction before a recovery materializes.

Dragosch mapped out structural support levels beneath the current spot price, identifying three critical zones. The 200-week moving average sits near $61,000, the realized price is near $56,000, and the long-term holder cost basis is near $48,000. Each level historically represents a zone where buyers have stepped in, though $48,000 marks the extreme downside scenario if all supports fail.

Despite the bearish outlook, Bitwise’s experimental bottom-cycle probability model began ticking higher last week. However, on-chain indicators remain below the extremes typically seen at prior cycle lows. Dragosch attributed the recent sell-off primarily to roughly $2 billion in weekly ETP net outflows, equivalent to about 50,000 Bitcoin sold into the market over a short period, rather than a slowdown in corporate treasury buying.

Support Levels and Market Indicators

The following table outlines the key support levels identified by Bitwise:

Galaxy Head of Research Alex Thorn offered a similarly cautious view, stating Bitcoin has not yet bottomed. In a report published Thursday, Galaxy noted only four of 13 historical bottoming indicators have triggered so far. The firm projects a potential bottom between $40,000 and $46,000 sometime between now and Q4 2026, adding that traditional assumptions of 75% to 80% peak-to-trough declines are less likely as cycle amplitudes compress.

Bitcoin fell roughly 28% from its May high near $82,000 to below $60,000 during the latest drawdown before recovering to $63,300 Friday, up 0.9% on the day. Dragosch expects the market bottom to arrive before the consensus October halving-cycle timing.

Altcoin Outlook and Legislative Catalysts

Regarding altcoins, Dragosch said Bitwise’s Altcoin Excitement Index shows no signal. The catalyst for any alt season rotation hinges on whether the US passes the CLARITY Act, which Polymarket currently prices at roughly 60% odds for passage this year. Without that legislative unlock, Dragosch sees no structural catalyst to rotate capital from Bitcoin into the broader altcoin market.

Bitcoin (CRYPTO: BTC) ETF net assets have fallen back to election night levels, but analyst Scott Melker argues the dollar decline is price action not capitulation, with ETFs still holding 93% of their peak Bitcoin. Total ETF net assets peaked at $169 billion in October 2025 and have since fallen 54% in dollar terms. However, Bitcoin holdings only dropped from 1.37 million coins at the peak to 1.27 million today, a 7.2% decline. The $4.4 billion in net outflows over the record 13-session streak represents a real but small trim relative to total holdings.

The Dollar Decline Is Misleading

"These ETFs still hold roughly 93% of the Bitcoin that they did at the very top," Melker said on Yahoo Finance. "The decline in price that's being reported is price. It is not redemptions." The seller breakdown reveals who actually left. Hedge funds sold 31,400 Bitcoin, brokerages sold 18,800 Bitcoin, and Jane Street trimmed 10,800 Bitcoin. Meanwhile, advisors, the largest ETF holders with 150,300 Bitcoin, cut back just 5.9%.

Institutional Activity

Banks actually added positions during the decline. JPMorgan Chase (NYSE: JPM) bought 3,000 Bitcoin, Wells Fargo (NYSE: WFC) added 4,000 Bitcoin, and Abu Dhabi’s Mubadala sovereign wealth fund accumulated 1,100 Bitcoin. The takeaway is straightforward. Leveraged traders and fast money exited while long-term institutional holders held firm and banks quietly bought the dip.

Macro Headwinds and Market Rotation

May CPI rose 4.2%, the hottest print since 2023, driven primarily by oil and gas costs from the Iran war. However, core CPI only rose 0.2% month over month, below expectations, creating a split reading that leaves Fed Chair Kevin Warsh with no clear path forward. Rate hikes are now being priced in while rate cuts are effectively off the table. Bitcoin performs best when central banks loosen policy. A hawkish Fed environment tied to oil-driven inflation removes that tailwind and explains much of the selling pressure over the past month.

The next major test arrives Friday with the SpaceX IPO, already four times oversubscribed. Melker expects a liquidity vacuum as capital rotates into SpaceX, Anthropic, and OpenAI listings. Hyperliquid’s pre-IPO SPCX contract already trades at $163, a $28 premium to the $135 IPO price.