Bitcoin Recovery Hinges on Inflation, $126K Target Still in Play

Bitcoin's recovery from its July low is still in its early stages, with the asset up 46% from its $57.8K low. According to Ecoinometrics, historical drawdowns and recoveries suggest that Bitcoin could take 60 to 230 days to reclaim its all-time high of $126K. The research firm states that the recovery is not yet mature, as Bitcoin is still around 30% below its all-time high, 90 days past the bottom, and the trend is still developing.

The Ecoinometrics outlook is supported by on-chain data, which suggests that Bitcoin's 'expansion' phase could kick off in early 2027. This is indicated by the Choppiness Index, which distinguishes sideways conditions from trending markets. The index is currently near a peak, and its pullback would suggest an accelerated $BTC expansion phase.

However, the expansion phase is being delayed by the macro landscape, specifically inflation. According to Ecoinometrics, headline US inflation has been sticky and hasn't trended down as expected, which is limiting the aggressive recovery of Bitcoin. The asset's demand is still negative, despite improved U.S. spot $BTC ETF flows in the past few weeks.

The 2025 top buyers are at break-even and driving the current selling pressure, according to Glassnode. Those who bought the 2025 rally are selling the most coins per day this year, while those who bought the decline are not. This means that $89K and $97K will be key resistance levels that must be cleared for Bitcoin's expansion phase to extend.