Bitcoin May Reach Turning Point as Durable Bottom Forms

Grayscale posted on X on Aug. 22 that a roughly $10,000 weekly rally pushed bitcoin to $79,500 on Aug. 21 and could mark a turning point. The firm attached a chart comparing the most recent downturn with four prior cycles and measured the current drawdown at about 50%, shallower than earlier declines.

The chart indexes bitcoin at 100 at each cycle peak and tracks performance by days since that peak using Coin Metrics data. Grayscale compared the current cycle, which begins with the October 2025 high and runs through Aug. 20, with peaks in June 2011, December 2013, December 2017 and November 2021. The firm noted that past bottoms have tended to fall about 80% below cycle peaks, while the latest bear market dropped roughly 50% from its high.

Grayscale wrote, “This week may be a turning point for bitcoin,” and added that the chart does not prove the latest low will hold. The firm said the Aug. 21 rally broke a prolonged trading range and forced some bearish derivatives positions to close, a dynamic that helped accelerate the price rise. The rebound also appeared to coincide with renewed spot demand.

U.S. spot bitcoin exchange-traded funds recorded about $1.92 billion in net inflows over five sessions ending Aug. 21, bringing total net assets in those products to $96.07 billion. Grayscale presented those flows alongside the chart to show the rally extended beyond forced buying from short squeezes.

Separate research from Vaneck, dated Aug. 18, found that eight of 12 capitulation signals were active as of Aug. 12 and that all 12 had entered capitulation zones at some point during the prior three months. Vaneck described the drawdown as possibly in later stages and said bitcoin may be nearing or entering an accumulation phase. The firm expected a shallower trough than in earlier cycles, citing greater access through spot ETFs, a larger base of institutional holders and the absence of major leveraged-lender failures.

Vaneck also cautioned that the indicators do not provide reliable short-term confirmation of a bottom. Its analysis found similar clusters of signals historically produced below-baseline average returns over 90 and 180 days, while one-year returns tended to exceed typical performance; the firm noted the sample set was small and the signals overlapped.

Market participants point to factors that could still test recent gains, including higher interest rates, weaker liquidity, fund redemptions and profit-taking. Grayscale listed structural adoption, the maturity of the bear market and a potentially supportive macroeconomic backdrop as considerations for long-term investors while emphasizing remaining risks.

Earlier bitcoin cycles included correction phases erasing roughly 78% to 94% from previous peaks. Analysts cite changes in market structure-wider ETF access and larger institutional holdings-as possible reasons future declines could be less severe. Recent price action, ETF inflows and chain-level signals indicate the market has absorbed part of the downturn without repeating the deepest prior losses. Observers say only additional data over time will show whether a more durable bottom has formed.