Bitcoin Update: Is The Bottom In?

[3 minute read]

Introduction

I remain convinced that the best use of capital over the next 6–12 months is accumulating Bitcoin, even if confirmation of that view may take 2–3 years.

The magnitude of future returns will depend on buying at today’s discounted prices (40% off the all time high) or a future clearance sale that is far from guaranteed.

Let’s review the bear and bull cases.

The Bear Case: Supported by market technicals

I. Technicals

The topping pattern completed in January and discussed in my February article has not achieved its downside target:

II. Duration

The duration of this bear market has only been six months compared to an average of approx. 12 months for all prior bear markets.

III. On Chain Metrics:

Blockchains are public ledgers, offering investors unique insights into capital flows.

When compared to prior cycles, several key metrics suggest the bear market has further downside.

My favorite such metric is MVRV (Market Value to Realized Value).

MVRV compares the current price of Bitcoin to the average price investors paid.

It indicates whether holders are, in aggregate, sitting on profits or losses.

In all other bear markets, the Bitcoin market cap (black line in the chart below) has fallen below the realized cap (blue line), suggesting investors were, in aggregate, underwater.

This cross has yet to occur during the current bear market.

Historically, the cycle does not fully reset until aggregate holders are underwater.

The Bull Case: Supported by a wash out in positioning and a new marginal buyer

I. Technicals:

A different technical view paints a bullish picture.

Bitcoin declined 52% from the October 2025 high to the February 2026 low.

Prior bear markets produced larger drawdowns, but also followed extremes in sentiment and leverage.

No such extremes existed at the 2025 high.

It’s reasonable to assume the 52% decline largely reset positioning and that most leverage and weak hands have been shaken out.

Since finding a bottom, Bitcoin is now up 12% from the pre Iran war level and 25% from the February low.

Price is consolidating around the 2021 high, potentially turning resistance into support (green box in the chart below).

If price holds, it would also represent a higher low when compared to the 2024 post election rally consolidation.

II. Stretch (STRC): A new marginal buyer

Strategy (formerly known as MicroStrategy), is a Bitcoin treasury company.

Strategy continuously raises capital to accumulate Bitcoin for the benefit of its shareholders.

The company has found product market fit with its latest preferred stock offering, STRC. Preferred stock is a class of equity that gives shareholders priority over common shareholders in receiving dividends.

STRC offers investors an 11.5% variable interest cash dividend yield.

At less than one year old, STRC has already raised $6.3B, exceeding the total raised through all prior preferred equity offerings combined.

Momentum in this product is accelerating.

The company is using the proceeds to buy Bitcoin.

STRC may create enough steady buying pressure to put a floor under the market.

Conclusion

After Bitcoin topped in October, I turned bearish in November and doubled down on that view in February.

With price down 52% peak to trough and still 40% off the October high, the market is now more balanced.

Good arguments can be made on both sides.

How do we manage a position in a 50/50 market?

Probabilistic allocation.

We own 50% of our target position.

The remaining 50% can be acquired on either future weakness or confirmation that a new bull market has begun.

In markets where outcomes are uncertain, forecasting is not the edge.

Position sizing is.