Bitcoin’s recent price decline has prompted market analysts to assess whether the price is building, with one prominent analyst saying the risk-reward profile has changed following the selloff.
Summary
- The “Checkmate” assessment suggests that Bitcoin has entered “deep value” territory.
- The recent selloff capitulation losses are similar to those seen at the lows of the 2022 cycle, indicating a potential market decline with a 60% chance.
- Bitcoin price may be down, but further declines are possible as market sentiment changes.
James “Checkmate” Check, former lead researcher at Glassnode and author of Check On Chain, told. What Bitcoin does host Danny Knowles that Bitcoin has entered “deep value” territory across multiple retracement frameworks when it comes down from recent price points, according to statements made on the podcast. The assessment noted that capitulation-style losses have increased to levels last seen in the 2022 cycle decline.
The analysis stated that if Bitcoin does not trend towards zero, the statistical setup appears to be increasingly asymmetric after the selloff. The analyst said the current situation represents a time for market participants to pay attention rather than lose focus.
The researcher said he was focusing on market structure rather than identifying a single forced seller behind the price movement.
The check provided a possible test, meaning that the probability of the bottom has increased significantly. He said the probability that the market has already set a reasonable low is more than 50%, more likely 60%, according to his analysis. The analyst gave Bitcoin a low probability of reaching a new high within the year without a major macroeconomic change or significant market event.
As for exchange-traded funds, Check cited billions in cash outflows during the withdrawal, but characterized the situation as a stopgap rather than a structural failure. He noted that at the previous peak, about 62% of cumulative income was underwater, while ETF assets under management only declined in the mid-single digits. Check previous suggested exits corresponding to CME open interest, which corresponds to the correction of the underlying trade.
The analyst criticized the reliance on the four-year halving cycle as a timing tool, calling it “unnecessary bias.” Check said his approach prioritizes looking at investor behavior over calendar-based speculation.
Even if the bottom is established, Check said he expects the market to revisit. He argued that bottoms are often formed by multiple “capitulation wicks” followed by extended periods of reduced activity, where continued uncertainty erodes confidence among cyclical buyers. The analysis revealed that making a bear case at current levels would be premature, framing the current zone as a late rather than an early phase of the move, while acknowledging that prices could continue to decline.
The analyst described two failed attempts of all time in October followed by a sharp decline that may cause significant losses for market participants. He cited what he called a “catch-up wall” of invested wealth set above critical levels, including a threshold he called “the bull safe haven.” The experiment argued that if the price fell below those levels, the probability of a decline increased.
The main reference level cited by Check was the True Market Mean, defined as the long-term value of the center of gravity that also overlapped with the ETF’s cost base. He said that once that level was broken, the state of mind shifted to the acceptance phase where market participants began to believe that a bear market had begun.
Check argued that the market was then pulled into the previous high volume consolidation zone where most of the trading volume of this cycle occurred. He said the sell-off may have involved a sell-off, but he put that as secondary to a broader shift in market sentiment, with participants selling off rallies during the downtrend.
The most important bearish signal emphasized by Check was the loss ratio experienced during the recent decline. He said that capitulation losses occurred at a very large daily rate, compared to the bottom of 2022, with sellers concentrated among recent buyers from the late cycle and those who bought during the previous consolidation. Check and notice that the SOPR (Spent Output Profit Ratio) printed by removing one standard deviation, a reading that has historically appeared in only two situations: as an early warning signal and near stages of decline.
The experiment also confirmed that bottoms are formed through a process involving multiple counter events followed by extended periods of diminishing returns, rather than a single definitive price point.
