Bitcoin Risks Further Fall Toward $40,000 as Analyst Warns of December Capitulation

Bitcoin slipped below $70,000 during this trading week while Ethereum dropped 4% and XRP held near $1, highlighting fresh downside pressure across digital assets. For individual investors, the decline follows a failed weekly close above $83,000 that analyst Benjamin Cowen identified as a probable bull trap rather than the start of a sustained rally. The weakness signals that the cryptocurrency market may be entering a final capitulation phase ahead of a potential cycle bottom. What to watch next: The Federal Reserve’s December policy decision and whether Bitcoin holds key technical support levels through year-end.

According to analysis by Cowen from Into The Cryptoverse, Bitcoin historically experiences sharp selloffs in the months following U.S. midterm elections, referencing similar downturns in November of 2014, 2018, and 2022. Cowen indicated that if Bitcoin breaks below its 200-week moving average by roughly 30%—a pattern observed in 2015 and 2020—the price could decline toward the $40,000 mark. He noted that the asset's current downturn could establish a definitive market bottom between December and early January.

Several valuation metrics suggest the market reset is not yet complete. The MVRV Z-score currently sits at 0.565, remaining well above the sub-zero readings logged during prior cycle bottoms. Similarly, on-chain risk stands at 0.21 compared to historical lows beneath 0.10, while Bitcoin remains priced above its aggregate cost basis. Meanwhile, social risk has decreased to 0.07, reflecting retail engagement levels near late-2018 lows.

Cowen highlighted the Federal Reserve’s December meeting as a primary catalyst that could drive final market liquidations, drawing parallels to the central bank's influence during the 2018 bottom. A hawkish stance from policymakers could trigger additional selling, resetting on-chain metrics and laying the groundwork for a eventual recovery in 2027. Alternatively, if Bitcoin successfully defends its 200-week moving average through late December, it would reinforce a more immediate bullish outlook.