Bitcoin is facing a tough time as it tries to avoid a fourth consecutive monthly decline, with the cryptocurrency market struggling to cope with a significant shift in momentum that has left many investors at a loss. According to data from CryptoSlate, the largest digital asset has dropped by almost 7% in the last 24 hours to $82,513. Long traders who were speculating on the price of Bitcoin suffered losses of over $750 million during the recent price collapse, marking the highest level of losses for this group of traders since last November.
As a result, Bitcoin is on track to experience its fourth straight month of decline, with the crypto asset losing more than 5% of its value in January alone. This follows a 3.99% loss in December and a sharp 17% decline in November, with a 4% drop in October. The poor performance of the price this year has led to the flagship digital asset falling below its 2-year moving average for the first time since 2022.
Bitcoin analyst Joe Consorti pointed out that the loss of the 2-year moving average signals a significant shift in the market. Historical data suggests that whenever Bitcoin’s price has dropped below this average, the market has either experienced further downside or entered a prolonged accumulation phase that sets the stage for the next bull cycle. This breakdown could signal the beginning of a genuine capitulation cycle, as seen in previous instances when the price fell below the 2-year moving average.
The recent liquidation shock in October 2025 reset the cycle, leading to one of the largest forced unwinds in the crypto market’s history. The liquidation wave totaled more than $19 billion, highlighting the reliance on leverage rather than actual demand in driving the market’s upside. Since then, the market has been in a consolidation phase, with rebounds stalling and the market moving from expansion to consolidation.
The market’s recent cooling down has coincided with a surge in traditional havens like gold and silver as investors seek safety amid policy uncertainty and geopolitical risks. Washington’s involvement in the market has also impacted prices, with a draft market-structure bill introduced by senators adding to the uncertainty. The legislative outcome could determine the market’s direction, with a potential rally if clarity is achieved, or a demand for real-world adoption if the legislation fails.
Despite the subdued price action, some analysts believe that the drawdown is more of a cyclical reset than a structural breakdown. However, liquidity signals remain cautious, with indicators like the Coinbase Bitcoin premium index showing weakness in US spot pricing compared to the global average. Traders are monitoring stablecoin supply, which has seen a contraction, as it correlates with buying capacity within the crypto ecosystem.
In conclusion, the market is at a crossroads, with two clear paths ahead: a bullish scenario where sustained spot demand lifts prices back above key levels, or a bearish continuation of the consolidation regime with downside risks concentrated around specific bands. The market’s response to these factors will determine its direction in the coming months.
