K33 Research says Bitcoin traders are currently positioned in an unusually defensive way, which may be reducing the likelihood of the sharp, leverage-driven breakdowns seen in earlier bear markets.
Bitcoin BTC $77,190.69 recently failed to break above its key moving average near $83,000, a move that has revived concerns about a potential deeper correction.
However, in a Tuesday report, K33 argued that the current cycle is unfolding differently from the 2014, 2018, and 2022 downturns, when similar technical rejections often preceded steep selloffs.
In those previous cycles, Bitcoin typically rallied back toward the 200-day moving average before quickly reversing lower as leverage rebuilt and bullish positioning became overcrowded, ultimately triggering forced liquidations. K33 says that dynamic has not appeared in the current market.
“The current slow grind has not produced such a dynamic,” wrote K33 head of research Vetle Lunde, noting that derivatives data instead reflects “uniquely pessimistic sentiment.”
One key signal is Bitcoin’s funding rate, which has remained negative for 81 consecutive days on a 30-day average basis. This is nearing record levels and indicates traders have consistently maintained bearish positioning even during rebounds from February lows around $60,000.
CME Bitcoin futures also show caution, with annualized basis recently falling below 2.5%, a level typically associated with subdued risk appetite.
Despite this defensive positioning, K33 warned that risks remain. Open interest in Bitcoin derivatives is still elevated, raising the potential for sharp volatility if market conditions deteriorate. At the same time, U.S. spot Bitcoin ETFs have recorded $1.6 billion in outflows over five days as prices approached the $83,000 level — close to the average cost basis of many ETF investors.
K33 noted that historically, investors tend to sell more aggressively when prices rebound toward breakeven after extended declines, suggesting that similar behavior may be emerging again.
Even so, the firm said its internal indicators resemble stronger market phases such as the March–April 2025 rally, when Bitcoin bottomed during tariff-related market stress before surging to new highs, rather than typical bear market recovery rallies.
K33 continues to believe that Bitcoin’s February decline toward $60,000 likely marked the largest drawdown of the current cycle.
“The less aggressive bull market of 2025 sets the stage for a more moderate bear market in 2026,” Lunde wrote, adding that K33’s base case is that $60,000 represents the cycle’s maximum downside level.
