Ki Young Ju: Bitcoin may have to retreat to the $55,000 region before entering a true recovery cycle

Selling pressure surpasses new capital inflows; divestment by institutions and the lack of buying demand are shaping the current cycle.

Ki Young Ju, CEO of CryptoQuant, has stated that the current Bitcoin market is in a clear downtrend. He warns that a true recovery could take many months to develop and that prices may need to fall even further before a sustainable growth phase begins.

Insufficient new capital to change the situation

In an interview with a Korean cryptocurrency publication, Ki Young Ju analyzed data to clarify the prolonged market weakness. He pointed out a serious imbalance between incoming new funds and selling pressure.

“Hundreds of billions of dollars have been pumped into the market, but the total market capitalization is either stagnant or even declining,” Ki Young Ju commented. “This indicates that selling pressure is far exceeding the amount of new capital being injected.”

He also emphasized that historically, deep corrections often require at least three months of accumulation before investor sentiment can recover. According to him, any short-term rebound should not be seen as a sign of a new bull cycle.

Two recovery scenarios for Bitcoin

Ki Young Ju outlined two main scenarios for Bitcoin’s recovery:

1. Deep decline before a rally: Bitcoin’s price could drop to the realized price of around $55,000. This is the average price paid by all Bitcoin investors, calculated based on on-chain transaction data. Historically, Bitcoin often needs to revisit this level to trigger a new growth phase.
2. Prolonged sideways movement: Bitcoin’s price could fluctuate between $60,000 and $70,000 for an extended period, with narrow volatility, before entering the next growth phase.

Regardless of the scenario, Ki Young Ju stressed that the conditions for a sustainable rally are not yet in place. ETF fund flows have stalled, OTC buying demand has nearly disappeared, and both actual market capitalization and standard market cap are trending downward.

Causes of decline: Institutional withdrawal

According to Ki Young Ju, most recent selling pressure comes from financial institutions pulling out. As Bitcoin’s volatility sharply decreased over the past year, institutional investors—who participate to exploit beta-delta-neutral strategies—shifted to other assets like Nasdaq and gold.

“When Bitcoin loses volatility, institutions have no reason to maintain their positions,” Ki Young Ju explained. Data from CME shows that institutions have significantly reduced their short positions, which is not a bullish signal but simply reflects capital withdrawal.

He also pointed out patterns of heavy sell-offs, where large amounts of Bitcoin are sold at market prices in a short time. He suggests this could be a sign of forced liquidations or deliberate dumping by institutions to manipulate derivatives markets.

Altcoin: Even bleaker prospects

The overall outlook for altcoins is even gloomier. Ki Young Ju noted that although altcoin trading volume in 2024 appears lively, actual capital is mainly concentrated in a few tokens with potential ETF listings. The total altcoin market cap has not surpassed previous all-time highs, indicating that capital is just rotating among existing investors rather than expanding the market.

“The era when a single narrative could support the entire altcoin market is over,” Ki affirmed. He acknowledged that innovations like AI agent economy could create new value models for altcoins in the future, but he does not believe that price rallies based solely on stories will return.

“The short-term growth potential of altcoins is very limited. The loss of investor confidence from this downturn will take a long time to recover,” he concluded.

Conclusion

Ki Young Ju’s insights paint a clear picture of the current state of the Bitcoin and altcoin markets. With selling pressure far exceeding new capital inflows, coupled with institutional withdrawal, the cryptocurrency market is facing a prolonged correction phase. For a sustainable recovery, the market needs time to accumulate and reset fundamental factors. Investors should exercise caution and not expect short-term rallies as signs of a long-term rebound.