Bitcoin (BTC) has been facing challenges in regaining momentum in the market, unable to exceed its closest resistance level of $94,000 for more than a month. Currently, the cryptocurrency is trading in a wide range between $85,000 and $93,000, raising concerns about potential price corrections in the coming months.
Against this backdrop, market analyst NoLimit recently shared on social media platform X (formerly Twitter) that he predicts Bitcoin might reach a low of approximately $40,000 by 2026. This forecast suggests a notable 54% drop from current price levels, which hover just above $87,860.
A Historical Perspective On Market Cycles
NoLimit’s analysis provides several insights into this anticipated downturn. He highlights that Bitcoin has historically surprised investors, particularly when market confidence is at its peak. While each price cycle may seem distinct, NoLimit contends that the fundamental mechanics remain largely unchanged.
He underscores the cyclicality of Bitcoin, referencing a four-year cycle that is influenced by liquidity, leverage, and human behavior, rather than just sentiment.
In his view, the market is currently late in this cycle, as Bitcoin has historically followed a three-step process during upward movements.
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Initially, Bitcoin tends to experience a price surge following the Halving event. This uptick is typically accompanied by a surge in maximum leverage and late-stage buyers. The cycle then culminates in a sharp and often chaotic reset before the next significant price uptrend begins.
Historically, Bitcoin has seen substantial declines during these resets, such as an approximately 85% drop in 2013-2014, an 84% decline in 2017-2018, and a 77% drop throughout the 2021-2022 cycle. In each case, investors believed the circumstances were different, yet the results proved consistent.
$40,000 As Foundation For Bitcoin’s Next Bull Run
Given the current market conditions, NoLimit points to several crucial indicators. He mentions that Bitcoin has already seen considerable price appreciation, with institutional interest and exchange-traded fund (ETF) approvals now part of the ecosystem.
He also notes that many traders are over-leveraged, market volatility is constrained, and there is widespread anticipation for further price rises. These factors often indicate an increased risk of downward movement in the market.
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A potential decline toward the $40,000 threshold should not be viewed as an unexpected disaster, according to NoLimit. He asserts that substantial price declines have historically preceded major upward movements.
Moreover, this price target aligns well with various technical indicators, including previous resistance levels that have flipped to support, long-term moving averages, and the liquidity gap from ETF approvals.
These elements suggest that a move toward this range could exhaust forced selling and create a solid base for recovery.
Featured image from DALL-E, chart sourced from TradingView.com
