Bitcoin's 47% Rebound Fails to Confirm Bottom

Bitcoin's recent 47% rebound from its July low to around $86,000 has sparked questions about whether this confirms the bottom. However, according to Binance Research, historical data does not support this conclusion.

Binance Research analyzed seven historical cases between 2011 and 2023 where Bitcoin closed at least 40% above its cycle low while still below its previous all-time high. They found that in five of these cases, Bitcoin was only 30% to 38% below its prior high, and four of those five later broke below the previous cycle low within 43 days.

The researchers noted that the current signal appears to fit into this category, as Bitcoin was 35.6% below its previous high when the rebound signal appeared. However, they also emphasized that the sample size is limited and that this analysis should be treated as a base rate rather than a forecast.

In related coverage, earlier cycle research by Galaxy Research suggested that Bitcoin's possible bottom may be well below its current price, citing several historical bottom indicators that have not yet triggered.

Binance Research also found that Bitcoin's current bear market decline looks mild when measured only in percentage terms. However, when adjusted for changing volatility, the decline appears more severe. The researchers calculated that the current 54.2% drop sits close to the severity of previous bear markets despite appearing smaller on a normal price chart.