PlanB Presents Four Possible Bitcoin Bear-Market Scenarios

Bitcoin Bear Market Scenarios

Plan B, the anonymous analyst known for the stock-to-flow model, has commented on Bitcoin’s downturn, outlining four potential paths for the ongoing bear market. He noted that Bitcoin’s price has dropped significantly, about 40% from its peak of $126,000, closing January at around $78,000. According to his analysis, the 200-week moving average stands at $58,000, while the realized price is at $55,000. He sees the January Relative Strength Index (RSI) at 49, indicating a downtrend.

Plan B explained, “The RSI here is 49. Anything above 50 suggests an uptrend, and below 50 indicates a downtrend. Being at 49 means we’re in a bear market, resembling previous cycles from 2014-15, 2018-19, and now 2022-23.”

Four Bitcoin Bear Market Scenarios

He then went through four scenarios regarding how the price drawdown could unfold. The first is what he calls the historical “worst case,” which is an 80% drop from the all-time high. Given the peak of $126,000, that would bring Bitcoin down to around $25,000. He did admit that this thought seems a bit strange.

The second scenario, according to his backtesting, suggests a bottom near the 200-week moving average, estimated between $50,000 and $60,000. Plan B pointed out that previous cycles tend to see prices drop toward this moving average, referencing 2022 and 2015 where the RSI bottom matched with this long-term measure.

The third scenario is a shallower retrace, stopping just above the previous cycle highs, which he estimates to be between $69,000 and $70,000. He suggests that, because the last bull market seemed weaker, the subsequent bear market might not be as severe.

“It seems like the earlier bull market didn’t have the usual high RSI peak,” he remarked. “So, perhaps the bear market could be quite shallow, potentially just above that $69,000 level.”

In his fourth scenario, which traders tend to favor, he speculated that the market might have already found its low, pointing to a recent drop to $72,900. However, the price fell to $70,140 subsequently, making this possibility less likely.

He summarized his four bear market scenarios as: 1) an 80% drop to $25,000, 2) a decline to the 200-week moving average near $50,000-$60,000, 3) just above the previous ATH around $70,000, and 4) the recent low of $72,900.

Shifting focus back to the stock-to-flow framework, Plan B reiterated that while a price of $500,000 may signal scarcity, it’s not a tool for pinpointing market peaks. He emphasized that this model discusses long-term averages and transitions rather than short-term price movements.

He concluded by noting that the cycle template could be shifting. Traditionally, peaks happen one or two years post-halving, but that hasn’t occurred following the 2024 halving. His current framework is centered on whether Bitcoin approaches the realized price and 200-week average, holds previous ATH zones, or tests lower levels, while still allowing for a late-cycle rally.