Bitcoin’s Plunge: A Bottom or Just a Pause in the Farce?

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Ah, the tempestuous dance of Bitcoin! How it twirls and dips, leaving the hearts of its admirers in a state of perpetual suspense. The recent decline in its price has, of course, prompted the wise men of the market to ponder whether a floor is forming beneath its feet. One such sage, the illustrious James “Checkmate” Check, a former luminary at Glassnode and now the oracle of Check On Chain, has declared that Bitcoin has entered the realm of “deep value.” How profound! According to his pronouncements on the What Bitcoin Did podcast, the risk-reward profile has shifted, much like a nobleman adjusting his cravat after a particularly spirited debate.

  • “Checkmate” Check proclaims Bitcoin’s descent into “deep value” territory, a phrase that doubtless resonates with the gravitas of a Tolstoy novel.
  • The recent selloff, with its capitulation losses, mirrors the despair of 2022, suggesting a bottom with a 60% probability-a figure as precise as it is arbitrary.
  • While a bottom may be forming, further declines are possible, for the market’s sentiment is as fickle as a Russian aristocrat’s affections.

Check, with the air of a man who has seen much and yet remains unmoved, noted that capitulation-style losses have spiked to levels last witnessed at the 2022 cycle lows. If Bitcoin is not destined for oblivion-a fate as dramatic as any in a Turgenev novel-the statistical setup appears increasingly asymmetric. Now, he says, is the time for market participants to pay attention, rather than lose themselves in the trivialities of everyday life.

Our analyst, ever the astute observer, focuses on market structure rather than the identity of the hapless soul behind the price movement. With the confidence of a man who has studied the stars, he assigns a 60% probability to the market having already set a meaningful low. Yet, he cautions against the notion of Bitcoin reaching new heights within the year without a macroeconomic miracle or a market event of epic proportions.

On the subject of exchange-traded funds, Check notes billions in outflows during the drawdown, characterizing the situation as mere positioning unwinds rather than a structural failure. At an earlier peak, approximately 62% of cumulative inflows were underwater, while ETF assets under management declined only modestly. He suggests that earlier outflows aligned with CME open interest, a detail as intricate as the plot of Fathers and Sons.

With a touch of disdain, Check criticizes the reliance on the four-year halving cycle as a timing tool, calling it an “unnecessary bias.” His approach, he declares, prioritizes observing investor behavior over calendar-based predictions-a philosophy as noble as it is impractical.

Even if the low has been established, Check expects the market to revisit it, for bottoms, he explains, form through multiple “capitulation wicks” followed by extended periods of reduced activity. Sustained uncertainty erodes confidence among late-cycle buyers, much like the slow decay of a once-grand estate in the Russian countryside. Formulating a bear case at current levels, he argues, would be premature, though prices could decline further-a possibility as inevitable as the changing seasons.

The analyst describes two failed attempts to reach all-time highs in October, followed by a sharp decline that likely resulted in significant losses for market participants. He references a “hodler’s wall” of invested wealth positioned above key levels, including a threshold he calls the “bull’s last stand.” Once the price broke below these levels, the downside probability increased, much like the inevitability of a tragic ending in a Russian novel.

A key reference level cited by Check is the True Market Mean, a long-term center-of-gravity price that overlaps with the ETF cost basis. Once this level broke, the psychological regime shifted to an acceptance phase, where market participants began to believe a bear market had begun-a realization as sobering as a winter morning in Moscow.

The market was subsequently pulled toward a prior high-volume consolidation zone, where a significant portion of this cycle’s trading volume had occurred. The selloff, Check notes, likely involved leverage liquidations, though he frames this as secondary to a broader shift in market sentiment, where participants sell rallies during perceived downtrends-a behavior as predictable as the antics of a minor character in a Turgenev story.

The most significant bottoming signal, Check emphasizes, was the scale of realized losses during the recent decline. Capitulation losses occurred at a very large daily rate, comparable to the 2022 bottom, with sellers concentrated among recent buyers from the late cycle and those who purchased during an earlier consolidation period. SOPR (Spent Output Profit Ratio) printed around minus one standard deviation, a reading that has historically appeared in only two contexts: as an early warning signal and near bottoming phases-a detail as esoteric as a footnote in a philosophical treatise.

Check concludes that bottoms form through a process involving multiple capitulation events followed by extended periods of reduced speculative interest, rather than a single definitive price point. How very Russian-a journey of suffering and reflection, with no clear end in sight.

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2026-02-12 22:56