Bitcoin Bearish Regime: Watch Out For Risk Assets

Market Momentum And Expected Returns

Bitcoin failed to break above $65,000 in its most recent attempt. That's a setback. It needed that push to move towards the bullish side of our market regime model.

This means it's time to take a closer look at the bearish scenario:

• How likely is it?

• What are the key metrics to watch?

• How bad could it be?

Let's dive in.

P.S. For the bullish scenario, check out this post.

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Bitcoin Bearish Regime: Watch Out For Risk Assets

The Takeaway

Bitcoin's recent failure to break above $65,000 keeps it in neutral territory, but with a cautionary outlook. 

Our market regime model suggests a significant risk of moving into a bearish phase within the next three months if broader market momentum falters. While the median return under normal conditions could see Bitcoin reach $73,000, a bearish scenario might push it down to $48,000, with a potential low of $27,000 in extreme cases. 

The key factor to watch is the overall trend in risk assets, particularly the NASDAQ and S&P 500. 

Investors should remain vigilant and avoid over-leveraging in this uncertain environment. The interplay between Fed policy and economic performance will likely shape Bitcoin's near-term trajectory.

Neutral Thanks To Momentum