Hello readers,

The ETFs have seen over $3.6b of inflows over the last week, a significant trend reversal from the $4.4b of outflows from 2/1/25-4/21/25.

At the same time, we continue to see elevated outflows from short-term holders. Over the last week, $13.7 billion was sent to exchanges from this cohort, which is similar to what we saw at the market peaks in December/January.

Despite the strong price action, we still think it’s unclear if we are in a sustainable bull market structure.

If we are not, then it’s prudent to start thinking about what a more bearish outcome for the rest of the year could look like.

As such, this week we’ll cover the primary indicators we use during bear markets to identify the bottom for BTC.

Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.

Let’s go.

Momentum & Onchain Data

200 Week Moving Average

As we can see below, BTC tends to bottom in bear markets when the price touches (or drops below) the all-important 200-Week Moving Average — which is currently $43,617.

When BTC bottomed in late ‘22, the 200 WMA was $23,757. At the floor of the ‘18 bear market, the 200 WMA bottomed at $3,158.

Where do we think the 200 WMA will be in the next bear market?

This, of course, will depend on price action moving forward, but we think it will ultimately land around $60-$70k.

Data: The DeFi Report, Investing.com

Realized Price

Realized Price is a proxy for the average cost of each BTC circulating today.

It’s calculated by taking the sum of every bitcoin (technically, each UTXO) currently in circulation, multiplied by the market price on the day those coins last moved onchain.

The metric isn’t perfect as it does not factor in BTC held in ETFs or BTC held on centralized exchanges (18.7% of the circulating supply).

With that said, it’s proven to be a reliable metric for identifying bottoms for BTC as the price tends to converge to Realized Price, while dipping below it when BTC is experiencing extreme bear market conditions.

Below, we can see that it’s played out consistently within each cycle.

The Realized Price is currently $44,576 and rising.

We expect Realized Price to continue to rise.

Why?

Realized Price increases significantly when coins that have been held for a long time are sold. For example, someone transferring BTC that was last moved at $20k to someone buying today would add $77k to the Realized Market Cap, pushing up Realized Price at the same time.

Where will it peak?

This depends on price action and the behavior of long-term holders, but our estimates have it rising toward roughly $60k by year-end.

Data: Glassnode, The DeFi Report

Cost to Mine 1 BTC

Bitcoin is a digital commodity.

But it trades in cycles like a physical commodity, such as oil.

As such, the market price of BTC tends to bottom during bear markets when production costs exceed the price of newly issued bitcoin.

Why?

As price drops below production costs, many miners have to shut down their machines and/or sell bitcoin from their treasury to cover operating expenses.

This tends to happen after BTC has already experienced a significant downturn.

Therefore, “miner capitulations” tend to mark the bottom.

Below, we can see that the average cost to mine 1 bitcoin is currently about $90k, as calculated by Blockware (a Bitcoin mining services company). Macro Micro has the average cost at $91.7k.

Data: Blockware Solutions

Why is it so high?

Bitcoin miners tend to get out over their skis during bull markets by aggressively adding new mining capacity. We can see this below as the hash rate has nearly doubled over the last year, creating more competition (and higher costs) for each block of rewards.
Data: Glassnode, The DeFi Report
The Bitcoin halving occurred last April, cutting the amount of newly issued BTC in half. As a result, miners have to expend twice the amount of resources (energy cost) to mine 1 BTC as they did a year ago.

The above data from Blockware seeks to estimate the average cost to mine 1 Bitcoin for all miners on the network.

But we wanted to better understand the production cost for the largest miners on the network.

As such, we calculated the direct energy costs for the top 10 publicly traded Bitcoin mining companies:

*Please note that MARA, RIOT, CORZ, and CLSK report their cost to mine 1 BTC. The others do not provide that figure, but we were able to calculate it based on their reported electricity consumption, power cost per MWh, and reported mined BTC.

The takeaway?

The weighted average cost to mine 1 BTC is much lower for the largest, most powerful miners that are operating with economies of scale and lower energy costs.

When the market price for BTC converges on these firms’ production cost, we believe BTC will be bottoming — which we expect to roughly align with the realized price and 200-week moving average when it happens.

Relative Strength Index

The RSI is a momentum oscillator that gauges the speed and change of market price movements.

A reading above 70 indicates an asset is becoming overbought. A reading below 30 indicates the asset is becoming oversold.

As we can see below (blue arrows), Bitcoin’s RSI dipped below 30 four times over the last year, marking a trend reversal in price action each time.

When we see market price converging with the 200 WMA, Realized Price, and Cost to Mine 1 BTC, we look for the RSI under 30 as confirmation of oversold conditions and the opportunity to buy BTC at fair value.

Qualitative Signals

In addition to the four primary data points above, we also look at qualitative signals to identify bottoms for BTC.

These include:

Hiding leverage becoming exposed. In the last cycle, this came from the GBTC premium, Terra/Luna, and fraud at FTX.
Protocol hacks/failed centralized exchanges.
“No coiners” get loud again.
Crypto Twitter becomes quiet as the tourists leave.
Fewer views on popular crypto podcasts and media outlets.
Less advertising and excessive spending at crypto conferences.
Coinbase's new & active users decline significantly.

Given the relationship between the Trump administration and the crypto industry in this cycle, we expect to see enhanced negative news/headlines as the bear market plays out and political talking heads/rivals have their moment in the sun.

Closing Thoughts

As noted in the intro, we still think it’s unclear if the bull market structure is intact for the rest of the year.

We expect to have more clarity in the weeks to come, especially as we get more insight into how the Fed is going to navigate the increasingly dark clouds building on the macro front.

As such, we want to have some powder dry so that we’re prepared to buy with conviction when the opportunity presents itself. We think that will happen when we see a confluence amongst the four primary data points we’ve shared in today’s report.

That’s why we’re sharing this work now.

With that in mind, we continue to go deep on Ethereum and Solana so that we have a clean thesis for the winning smart contract network in the next bear market.

We’ll have more analysis to share on Ethereum and Solana next week.

Thanks for reading.

Take a Report.

And Stay Curious.

Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.

The DeFi Report Portfolio Holdings

Fair Value for Bitcoin

How to identify the BTC bottom when it comes

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