Five major historical indicators are lighting up simultaneously, signaling the bottom of the Bitcoin bear market

Original: Blockworks Research

Compiled by: Odaily Planet Daily Golem

Key Points Summary:

• Bitcoin's current price has dropped 50% from its historical high, and the bear market has lasted over 40 weeks. A series of long-term cycle indicators suggest that the market may be at or near the low point of price and time cycles;
• This month, Bitcoin reached a historically oversold level against the Nasdaq index, and in February this year, it also reached a historically oversold level against gold. Data close to these extreme levels typically heralds the emergence of long-term cycle lows and indicates that Bitcoin is likely to perform well and yield positive returns in the next 1-3 years;
• The actual price of Bitcoin (i.e., the on-chain total cost of circulating Bitcoin supply) is currently $53,000, which is 18% lower than the spot price. Historically, every bear market low has seen Bitcoin prices below the actual price, with Bitcoin prices being below the actual price only 12% of the time in its history. From this point onward, Bitcoin has generated considerable returns within a 1-3 year timeframe;
• Historical bear market cycles typically bottom around the 60th week after a historical high, suggesting that the low point of the current bear market cycle may occur at the end of November 2026;
• Overall, the convergence of various factors currently indicates that the period from now until December 2026 may be an extremely attractive long-term opportunity to accumulate Bitcoin again.

Diminishing Returns and the Necessity of Conditional Investment

Since March 2021, Bitcoin prices have remained stable; since November 2017, Bitcoin against the Nasdaq index has also remained stable, spanning nearly nine years. From the current time span, Bitcoin's performance against stock indices has been relatively stable, while its volatility is significantly higher than that of stock indices. On a risk-adjusted basis, Bitcoin's performance has lagged behind stock indices.

This context is crucial for how to hold Bitcoin. As Bitcoin prices rise and fall, its marginal returns will diminish. Passive, always-long strategies that have historically provided returns to holders are now becoming ineffective, so to achieve excess returns, it is increasingly necessary to seize opportunities to increase or decrease Bitcoin holdings at the right time.

To find these opportunity windows, the indicators proposed in this article are based on conditional signals, which have been in a "silent state" for most of history, with the strongest signals appearing at the tails, occurring only a few times every decade.

Currently, these signals have appeared simultaneously and all point to the same conclusion: Bitcoin may be at or near the long-term cycle price low.

Indicator 1: Nasdaq/BTC Relative Strength Signal

The first signal is constructed based on the ratio of the Nasdaq 100 index to Bitcoin, calculated from the weekly closing prices over the past 875 cycles. We calculate the 14-period relative strength index (RSI) of this ratio and smooth it using a 14-period simple moving average.

A rising RSI indicates that the Nasdaq index is in an overbought state relative to Bitcoin; a falling RSI indicates the opposite. This indicator is not an intraday trading technical indicator; it is the 14-week oscillation indicator's 14-week moving average, with overbought and oversold state transitions occurring over multi-year market cycles, rather than days or weeks.

Nasdaq/BTC RSI

The Nasdaq index being relatively overbought is a rare event. The RSI moving average has only been above 65 for 5.78% of its historical data and above 70 for only 0.35% of the time. These thresholds have only been breached in four periods: February 2015, February 2019, August 2022, and the period starting in late January 2026 and continuing to the present.

The current value needs to be analyzed from three aspects:

• First, the current level of 72.6 is at a historical high, exceeding the previous high of 68.5 set in September 2022 by 4.1 points, with all observations above 70 occurring in the past month;
• Second, the current cycle has lasted 24 weeks, setting a historical record, far exceeding the 11 weeks in 2015, 4 weeks in 2019, and 10 weeks in 2022;
• Third, this situation has only occurred four times in the past 16 years, making the current situation one of the rarest phenomena for this indicator. Measured this way, this is the most severe overbought condition for the Nasdaq index against Bitcoin in history; in other words, due to the currency pair and its RSI being able to show reversals, from a longer time frame, this is the most severe oversold condition for Bitcoin against the Nasdaq index in history.

Indicator 2: Long-Term Expected Returns

With each instance of the Nasdaq/BTC RSI index exceeding 66, in the three cycles that have occurred, the expected return curves for BTC/USD and BTC/NAS100 both show upward asymmetry, but only over a longer time frame.

Comparison of Expected Return Curves for BTC/USD and BTC/NAS100

Expected Returns for Nasdaq/BTC RSI

This table has two important characteristics:

• First is the time span. Short-term expected returns have almost no reference value, as the returns over 30-120 days are small and directionally inconsistent; for example, Bitcoin held in 2022 fell by 29.1% within 120 days but rebounded by 397% three years later. The relative strength signals have little indicative meaning for the trends in the next one to three years.
• Second is the diminishing return magnitude. The three-year Bitcoin returns for each cycle are about one-fourth to one-third of the previous cycle, which aligns with the diminishing marginal returns discussed above. In all observations, Bitcoin has significantly outperformed the Nasdaq index in the following three years.

Indicator 3: Gold/BTC Relative Strength Signal

If the Nasdaq index represents Bitcoin's status as a risk asset, then gold represents its status as a store of monetary value.

Constructing a similar indicator based on the gold/BTC ratio, we observe similar data, with values above 66 being rare, exhibiting mean-reverting characteristics, and clustering around extreme values. According to this indicator, February 2026 is the period of highest overbought levels in the history of gold/BTC.

Gold/BTC RSI

The rising RSI reading for this currency pair coincides with the long-term cycle price low for Bitcoin, demonstrating typical characteristics. The expected return curve for this indicator is similar to the results studied for the Nasdaq, indicating that in the 1-3 year timeframe, Bitcoin's historical performance has outperformed gold and the US dollar.

Comparison of Expected Return Curves for BTC/USD and XAU/BTC

Indicator 4: Bitcoin Actual Price (On-Chain Cost Basis)

The actual price of Bitcoin estimates the on-chain total cost basis of all circulating Bitcoins. Unlike the spot price, which reflects Bitcoin's current market value, the actual price measures the average price at which the existing supply was last transferred on-chain, thus estimating the on-chain cost. Historically, the actual price represents Bitcoin's deep value.

Bitcoin On-Chain Actual Price

The actual price serves as a reference standard rather than a bottom line. Currently, the actual price of Bitcoin is $53,000, which is 18% lower than the spot price, and Bitcoin's spot price has been below the actual price only 12% of the time in its history.

Similar to the RSI indicator mentioned above, this situation represents a cycle tail signal. Historically, every bear market low for Bitcoin has been below the actual price, and once entering this area, prices typically decline further before bottoming out. Therefore, dropping to or below $53,000 aligns with historical patterns rather than contradicting them.

From the point of entering this area, long-term expected returns have remained quite considerable.

Price Trends After Bitcoin Spot Price Falls Below Actual Price

From the first weekly closing price below the actual price in each cycle, historical data shows that significant positive returns have occurred within the next 150 weeks. The magnitude of these numbers declines with each cycle, aligning with the diminishing trend of the RSI indicator, but the direction remains consistent.

Historically, the first closing price of Bitcoin below the actual price marks the end phase of a bear market, not the beginning or mid-phase of a bear market. Nevertheless, the multiple of Bitcoin's spot price to its actual price has significantly retreated from the previous high of 2025 times, indicating that market risks have decreased.

Indicator 5: Cycle Clock

The final indicator is the simplest, showcasing the historical structure of Bitcoin bear markets, measured by price and time.

Duration of Bitcoin Bear Markets

In the cycles of 2013, 2017, and 2021, Bitcoin price lows typically occurred around the 60th week after historical highs. The current cycle is in its 40th week, with a retracement of 50%, which is consistent with the trends of the previous three cycles. If the pattern of the 60th week is maintained, Bitcoin's low will form at the end of November 2026.

Although the RSI indices for Nasdaq 100/BTC and Gold/BTC have shown extreme values, the retracement of this cycle still aligns with historical retracement paths.

The time dimension has also compressed the intervals between cycles, with each cycle retreating to new historical highs in increasingly shorter time frames. In other words, the time required to return to the previous high is shorter than in the previous cycle. Assuming this trend continues, a new historical high should appear within 120 weeks after the previous high, meaning a new high could emerge before February 2028.

These two observations do not contain any mechanisms; they are merely empirical rules from a few cycles. They serve as time anchor points, overlaying the aforementioned conditional signals, limiting the remaining downside for Bitcoin. If the historical structure holds, Bitcoin is about 20 weeks away from its low, or it may have already bottomed.

Future Price Trends for Bitcoin

Given the current situation, the following scenario combinations incorporate the background and historical results discussed earlier, depicting a range of paths that Bitcoin may take over the next three years. This is not a prediction or assertion of possible outcomes but aims to answer the question: If the resolution of the current situation is similar to past situations, where will the price head?

Assuming diminishing marginal returns for both upward and downward movements, that the actual price remains discounted, and referencing historical retracement paths in price and time, we constructed the possible price trends for Bitcoin under these conditions. Each possibility is drawn from Bitcoin's three-year performance following the emergence of a certain signal and scaled with varying intensities from 0.33 to 0.80 based on cyclical returns. The ranges marked in the chart represent the boundaries of historical distributions after reducing intensity, rather than the boundaries of potential market fluctuations.

The shaded areas show the range of these possibilities.

Predicted Future Price Trends for Bitcoin

These shaded areas are a proportionally scaled reproduction of the paths following the issuance of indicator signals in history. All these possible outcomes are satisfactory; they describe scenarios of historical repetition rather than all possible outcomes and do not include results of signal failures.

While returns are expected to vary by the end of 2026, by 2027 and 2028, the return distribution will clearly shift towards a positive and asymmetric upward trend. Given the current market environment and predicted paths, the upcoming quarters may provide an extremely attractive opportunity for long-term investment in Bitcoin.

Price Predictions for Bitcoin Over the Next 3 Years

Risks and Limitations

Each indicator should be evaluated and weighed based on its own value. These indicators should not be interpreted as mechanisms or causal relationships for Bitcoin cycle lows but should be viewed as manifestations that coincide with historically observed long-term cycle lows and exhibit corresponding characteristics.

Moreover, the listed indicators are not all the indicators that can be used to approximate long-term cycle price lows. The sample size on which this analysis is based is small; the RSI moving average shows valid samples from four independent cycles, one of which has yet to be determined; the actual price study is based on four cycles, while the cycle symmetry analysis is based on the three completed cycles. With such a small sample size, the historical expected return distribution can describe historical trends, but a deviation in one cycle will significantly weaken all presented relationships.

Additionally, the presented signals should not be viewed as independent corroborations. The RSI indicator, proximity to actual price, and cycle clock position largely measure the same fact: Bitcoin has significantly retreated from its peak and continues to decline. In any deep, sustained retracement, each indicator should trend towards extremes, so their simultaneous appearance is more like different measurements of the same observation rather than multiple independent and unique observations.

Structural changes may cause this cycle to ultimately deviate. The current cycle is the first to adopt ETF holdings, extensive corporate holdings, and more complex derivatives trading such as options and perpetual futures. The four-year cycle framework may ultimately prove to be merely a description of four observations rather than a sustained characteristic of the asset.

Finally, the RSI indicator signals are relative. Bitcoin outperforming the Nasdaq or gold could mean that both assets are rising or that the two assets are declining at different rates. Even if the RSI signal is favorable for Bitcoin, if the stock market or gold prices retreat from their current highs, Bitcoin's nominal price may also be pulled down. The signals presented here have little predictive power for movements before November and only reflect the asymmetry of price trends in the next 1-3 years.

Conclusion

However, considering the above indicators, our conclusion is that Bitcoin may be at or near a cycle low, which could form before the end of the year, after which it will resume an upward trend.

Each signal appears near its historically rare extreme values, and each signal has previously indicated that Bitcoin will achieve considerable returns in the coming years, outperforming stocks. If the low has not yet appeared, then the time from now until the low is likely to be an extremely attractive long-term reaccumulation interval for Bitcoin. These signals have been in a silent state for most of history, but now they have issued a "green light signal."