Grayscale Sees Potential Bitcoin Turning Point
Bitcoin’s rapid recovery may signal that its latest bear market has reached a turning point, crypto asset manager Grayscale shared in an Aug. 22 post on X. The post included a chart comparing bitcoin’s current decline with four previous market cycles.
The assessment followed a roughly $10,000 weekly bitcoin rally that lifted the cryptocurrency to $79,500 on Aug. 21, its highest price since May. The rebound broke a prolonged trading range and forced traders holding bearish derivatives positions to close their bets.
Although short liquidations helped accelerate the advance, the move also coincided with renewed spot demand and ETF inflows. Grayscale stated:
“This week may be a turning point for bitcoin.”
The asset manager expanded on the market outlook after publishing an assessment of whether current prices offer a good time to buy bitcoin. That analysis identified continued structural adoption, the maturity of the bear market, and a potentially supportive macroeconomic environment as three considerations for long-term investors.
Grayscale Chart Shows a Shallower Bitcoin Decline
The accompanying “Bitcoin Price by Cycle” chart indexes bitcoin at 100 at each cycle peak and tracks its subsequent performance by the number of days since that peak. The current cycle begins with the October 2025 high and extends through Aug. 20.
The visualization uses historical bitcoin price data from Coin Metrics to compare the current drawdown with four previous cycles whose peaks occurred in June 2011, December 2013, December 2017, and November 2021. Bitcoin’s current drawdown is shallower than the four earlier cycle declines shown.
Grayscale stated:
“Historically, bitcoin has bottomed ~80% below its cycle peak price. In the latest bear market bitcoin fell ~50% from its peak, less than all prior cycles to this point.”
The comparison does not prove that the latest low will hold, but it indicates that the market has absorbed the downturn without repeating earlier losses of approximately 80%.
Bitcoin’s recurring expansions and corrections have often followed a loose four-year pattern connected with halvings, liquidity, and investor behavior. Earlier bitcoin market cycles included correction phases that erased approximately 78% to 94% from previous peaks, although changing market structure could reduce the depth of future declines.
Other Market Signals Point Toward Accumulation
Separate research has also identified conditions associated with the later stages of a bitcoin correction. Vaneck’s Aug. 18 analysis found that eight of 12 capitulation signals were active as of Aug. 12, while all 12 had entered their capitulation zones at some point during the preceding three months.
Vaneck’s Bitcoin Chaincheck analysis described the drawdown as potentially late-stage and said bitcoin may be nearing or entering an accumulation phase. Vaneck also expects a shallower trough than in previous cycles, citing spot exchange-traded products, a larger institutional holder base, and the absence of major leveraged-lender failures.
Those indicators do not provide reliable short-term confirmation of a bottom. Vaneck found that comparable signal clusters historically produced below-baseline average returns over 90 and 180 days. One-year performance exceeded bitcoin’s typical return, but the finding relied on a small group of heavily overlapping observations.
ETF Demand Strengthens the Recovery
Renewed investment through U.S. spot bitcoin exchange-traded funds (ETFs) provides another measure of demand behind the recovery. The products recorded approximately $1.92 billion in net inflows over five sessions, ending Aug. 21 with five consecutive positive trading days and total net assets of $96.07 billion.
The inflows suggest that the rally extended beyond forced buying by short sellers, but they do not establish that another decline has been avoided. Higher interest rates, weaker liquidity, renewed fund redemptions, or profit-taking could still test the market’s latest gains.
Grayscale concluded:
“Markets were debating whether bitcoin would see another leg down in Q4 2026. While there are still risks, the rally this week may indicate we’ve reached a more durable bottom.”
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