This Bitcoin downturn is unlike previous cycles, with “uniquely pessimistic” traders reducing downside risk, K33 notes.

K33 Research says Bitcoin traders are currently positioned in an unusually defensive way, potentially reducing the likelihood of the sharp, leverage-driven crashes seen in previous bear market cycles.

Bitcoin BTC $77,190.69 recently failed to break above a key moving average near $83,000, a move that has renewed concerns about a deeper downside correction.

However, in a Tuesday report, K33 argued that the current market structure differs significantly from the 2014, 2018, and 2022 downturns, when similar technical rejections often led to rapid and severe selloffs.

In those earlier cycles, Bitcoin typically rallied back toward its 200-day moving average before quickly reversing lower as leverage rebuilt and bullish positioning became overcrowded, eventually triggering large-scale liquidations. K33 said that pattern has not emerged this time.

“The current slow grind has not produced such a dynamic,” wrote K33 head of research Vetle Lunde, adding that derivatives data instead reflects “uniquely pessimistic sentiment.”

One notable indicator is Bitcoin’s funding rate, which has stayed negative on a 30-day average basis for 81 consecutive days, nearing record levels. This suggests traders have consistently maintained bearish positioning even during recoveries from February lows around $60,000.

CME Bitcoin futures also signal caution, with annualized basis recently slipping below 2.5%, a level typically associated with reduced risk appetite.

Despite the defensive setup, K33 warned that risks remain elevated. Open interest in Bitcoin derivatives is still high, increasing the chance of sharp volatility if market conditions shift. Meanwhile, U.S. spot Bitcoin ETFs have seen $1.6 billion in outflows over five days as prices moved toward the $83,000 region, close to the average cost basis for many ETF investors.

Historically, K33 noted, investors tend to sell more aggressively when prices rebound toward breakeven after prolonged declines — a pattern that may be resurfacing in the current environment.

Even so, the firm said its internal indicators still resemble stronger phases such as the March–April 2025 rally, when Bitcoin bottomed during tariff-related market stress before climbing to fresh highs, rather than typical bear market relief rallies.

K33 maintains that Bitcoin’s February drop toward $60,000 likely represents the deepest drawdown of the current cycle.

“The less aggressive bull market of 2025 sets the stage for a more moderate bear market in 2026,” Lunde wrote, adding that the firm’s base case is that $60,000 marked the cycle’s maximum downside level.