Galaxy Digital Warns Bitcoin Could Drop to $58,000 Support Level

Bitcoin’s slide isn’t over yet. Galaxy Digital’s head of research Alex Thorn told clients the crypto could drift toward $70,000 and maybe hit the 200-week moving average near $60,000 in coming weeks or months, adding more pain to an already brutal selloff that wiped out billions.

The world’s largest cryptocurrency fell roughly 15% from January 28 to January 31, with Saturday’s brutal 10% drop triggering over $2 billion in liquidations across derivatives markets. That ranks among the biggest liquidation events on record, catching traders off guard and forcing mass position closures. Bitcoin briefly touched $75,644 on Coinbase, sitting well below the estimated $84,000 average cost basis of U.S. spot Bitcoin ETFs. The drop pushed Bitcoin below major investor purchase prices, making things pretty uncomfortable for recent buyers.

Not a pretty picture right now.

Thorn said roughly 46% of Bitcoin’s circulating supply now sits underwater. That’s the kind of stuff you see in late-stage bear markets, and it usually means more downside ahead. On-chain data shows a narrow ownership zone between $70,000 and $80,000, which Thorn called a potential risk area for additional price drops. Basically, lots of people bought in that range and they’re all losing money.

Bitcoin’s realized price sits near $56,000, while the 200-week moving average hovers around $58,000. Thorn pointed to these levels as historical cycle bottom indicators that have provided support during past downturns. If Bitcoin keeps falling, these areas might catch it.

But here’s what’s really bothering analysts: Bitcoin can’t rally with gold and silver despite economic uncertainty. While commodities attracted safe-haven flows, Bitcoin lagged behind, which kind of undermines its whole hedge-against-currency-debasement story. That’s not great for the investment thesis.

Some optimism exists though. Long-term holder selling averaged $500 million per day in 2025 but started decreasing recently. When that selling pressure eases up, it often coincides with market bottoms – at least that’s what history shows.

Market watchers remember 2020 when capital rotated from gold into Bitcoin, sparking a major rally. The ISM index shows economic expansion above 50, and gold pulled back recently, which might set up similar capital movements into risk-on assets like Bitcoin. Bull Theory noted on February 2 how Bitcoin followed gold’s movements back then – gold peaked at $2,075 in August 2020, dropped nearly 10% over four weeks, and Bitcoin mirrored that by falling around 20% from $12,000 to $9,800.

Galaxy Digital stays cautious for now. Thorn said concrete evidence of a market bottom remains elusive, but if Bitcoin revisits its realized price or the 200-week moving average, those levels could serve as long-term support like they did in past cycles. The firm keeps monitoring whether Bitcoin will stabilize around these key technical levels.

Institutional interest adds another wrinkle. Some institutions paused or cut their Bitcoin exposure amid the volatility, while others view big corrections as strategic entry opportunities. Any substantial increase in institutional buying could change the current dynamics and provide price stability, according to Thorn’s analysis.

The correlation breakdown with traditional assets raises questions too. Bitcoin historically moved with gold during economic stress, but the current divergence – gold gaining while Bitcoin struggles – creates uncertainty about Bitcoin’s safe-haven status. Thorn thinks this unusual pattern could influence investor sentiment and decision-making short-term.

As February moves forward, crypto stakeholders watch for macroeconomic shifts that could impact Bitcoin’s path. With the ISM index indicating expansion, some analysts speculate about rotation toward riskier assets. Market participants monitor this potential shift closely since it could influence Bitcoin’s price dynamics ahead.

Galaxy Digital remains vigilant, assessing market data and historical trends to gauge Bitcoin’s recovery points. The focus stays on whether the cryptocurrency will find footing around its realized price or the 200-week moving average – levels that previously acted as support during major selloffs.

For now, Bitcoin hovers around these critical thresholds while traders wait for clearer signals. The coming weeks look pivotal in determining if Bitcoin finds support at predicted levels or faces deeper challenges. Market participants didn’t specify exact timeframes, but the technical setup suggests key decisions ahead.

Bitcoin closed Friday near $76,000, still searching for direction.

The Federal Reserve’s recent hawkish stance on interest rates compounds Bitcoin’s struggles. Fed officials signaled potential rate hikes could continue longer than markets expected, making yield-bearing assets more attractive than non-yielding cryptocurrencies. Higher rates typically drain liquidity from risk assets, creating additional headwinds for Bitcoin’s recovery prospects.

MicroStrategy, one of Bitcoin’s largest corporate holders with over 440,000 coins, faces mounting pressure as its average purchase price sits around $62,000. The software company’s stock price closely tracks Bitcoin’s movements, amplifying volatility for shareholders. Other corporate treasuries holding Bitcoin, including Tesla and Block, also confront unrealized losses that could influence future allocation decisions across the institutional landscape.