The Macro View: A Potential Slide to $56,000

Bitcoin’s recent dip has sparked a familiar debate across the crypto market: is this a temporary pause or the start of a more significant correction? According to Bloomberg’s senior macro strategist, Mike McGlone, the decline could be seen as a “speed bump” with a potential downside toward $56,000.

In a recent post on X, McGlone suggested that Bitcoin’s behavior aligns with historical patterns. He noted the cryptocurrency’s tendency to revert to its 48-month moving average, which currently sits around the $56,000 level, following major rallies. McGlone explained that this movement mirrors previous cycle cool-downs rather than signaling a complete reversal of the long-term trend.

On-Chain Data Suggests a Local Bottom

While some analysts anticipate further declines, on-chain metrics present a more balanced picture. Data from analytics platform Glassnode and XWIN Research Japan indicate that the current downturn might be nearing its end. One key indicator, the Market Value to Realized Value (MVRV) ratio, has fallen to levels historically associated with local price bottoms. The MVRV ratio helps gauge whether an asset is overvalued or undervalued by comparing its market price to the average price at which its coins were last moved.

Glassnode’s latest report suggests the correction has been orderly, not panic-driven. The firm highlighted the Relative Unrealized Loss metric, which currently shows only moderate stress in the market. “Unlike the 2022–2023 bear market, where losses reached extreme levels, the current reading of 3.1% suggests only moderate stress,” the report stated. Glassnode concluded that as long as these losses remain contained, the market is likely in a mild bear phase characterized by revaluation, not fear.

Institutional Outflows and Market Pressures

The price correction has been influenced by broader risk aversion in global markets. A key factor has been four straight sessions of outflows from U.S. spot Bitcoin ETFs, draining approximately $1.3 billion from a primary source of institutional demand. This retreat has weakened a significant pillar of support that fueled Bitcoin’s rally earlier this year.

Adding to the downward pressure, over $1 billion in leveraged long positions were liquidated this past week. This has helped flush speculative excess from the market, a common feature of price corrections.

Analysts Remain Divided on Bitcoin’s Next Move

Opinion on Bitcoin’s trajectory is split. While McGlone eyes a potential drop to $56,000, other traders believe the cryptocurrency has found a solid consolidation level around $100,000. On November 4, Bitcoin briefly fell below this critical psychological threshold for the first time in over four months before staging a modest recovery to trade around $101,380.

Some remain cautious. Vineet Budki, CEO of Sigma Capital, warned that Bitcoin could still face a 65% to 70% retracement over the next two years if macroeconomic conditions worsen. In a different view, ARK Invest’s Cathie Wood recently trimmed her long-term Bitcoin price target by $300,000, citing growing competition from stablecoins, which are increasingly used as a store of value in emerging markets.

For now, the market appears to be in a mid-cycle cooling phase. If Bitcoin can hold its ground and reclaim momentum, sentiment could shift quickly. However, the current data suggests a period of stability and revaluation rather than widespread panic.

Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice, investment advice, or any other sort of advice. You should not treat any of the website’s content as such. Always conduct your own research and consult with a professional financial advisor before making any investment decisions.