Don't try to catch a falling knife. Every seasoned trader knows that, yet that is exactly what Bitcoin is doing now. BTC/USD plunged below the psychological $60,000 mark — more than 50% down from its October record high. Every bear market ultimately poses the same question: when will mass panic create a buying opportunity? Most crypto veterans who've lived through several boom?and?bust cycles answer unambiguously — not yet.

At first glance, Bitcoin is entering the zone where previous crashes found a bottom. The catch is that historical lows took months to form, and the deepest pessimism typically arrived only after valuations became attractive. One popular indicator — the realized price, the average cost at which investors acquired their coins — is, by CryptoQuant's estimate, about $53,400, nearly 10% below current levels. Weak?hand capitulation is not over.

Bitcoin drawdown dynamics

Bitcoin's market capitalization has evaporated by $1.3 trillion since the October peak. Retail traders, who historically bought the dips, have this time preferred to rotate into AI stocks. Meanwhile, confidence in one of the largest sources of demand, the firm Strategy, has been shaken by questions about its financing model. The company did resume purchases after the recent sell?off, but concerns about the sustainability of its leverage have only intensified.

Specialized ETFs aren't faring better. Over the past week, they saw outflows exceeding $1.3 billion. BlackRock's flagship IBIT recorded an $860 million outflow — its seventh consecutive five?day outflow, the longest streak in the product's history. Bloomberg reports ETFs have lost roughly $4.5 billion of capital year?to?date. Buyers who entered the market at much higher levels are underwater and unlikely to add risk.

Bitcoin failed to prove itself a safe haven during the Middle East conflict and amid inflation worries, losing its reputation as a portfolio diversifier. Instead of insurance, it is trading once again as a high?volatility risk asset. The market remains hostage to news about Strategy, and finding a new reliable buyer to replace the old pillars of demand will be difficult.

Thus, the crypto market has entered the area where past crashes eventually bottomed — but there are no guarantees history will repeat quickly. In my view, while ETFs are recording record outflows and Strategy remains under scrutiny, it's too early to talk about a reversal — the bears have not yet received the answer to the key question: can the realized price of $53,400 hold Bitcoin, or will money fail to return from the AI fields?

Technically, on the daily BTCUSD chart, a battle is underway around the pivot level at $59,250. A breach of that level would justify adding to the shorts opened from $62,200.