Bitcoin (CRYPTO: BTC) momentarily dipped below $60,000 on June 5 for the first time since October 2024, and roughly half of every Bitcoin in circulation is held at a loss. That’s doubtlessly adding a splash of panic to the market’s quite sour mood toward crypto; now priced at about $64,000, the coin is 49% down from its October all-time high near $126,000.

At the same time, spot exchange-traded funds (ETFs) saw net capital outflows of $1.7 billion in the trading week ending June 5, making it the worst stretch for outflows since February 2025. To make matters worse, even the largest corporate Bitcoin holder, Strategy, formerly known as MicroStrategy, just made its first sale since 2022.

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Investors are now openly worrying that the coin might fall even further. So are these concerns well-grounded, or is this another case of investors extrapolating a sharp decline because their momentary emotions are at a low point?

The bears have some decent data to work with

Bitcoin’s past bear market cycles saw it draw down by as much as 85% from prior peaks.

Applying that worst-case drawdown scenario to the recent all-time high of $126,000, the predicted price floor is somewhere between $45,000 and $30,000. That probably won’t happen, but even if it does, the price is very unlikely to fall further than that.

Unfortunately, with a hot May inflation print, a hawkish Federal Reserve, and the Strait of Hormuz situation injecting tremendous amounts of uncertainty, these conditions rhyme with the prior conditions that produced those brutal 60%-plus drawdowns. None of that guarantees more downside from here — in fact, a cessation of hostilities with Iran could lead to some significant upside — but it does mean investors should brace themselves.

Why does buying through this beat selling?

The good news is that in the past, when half of Bitcoin’s circulating supply was held at a loss, it usually marked the inflection point for the end of the bear market. Then, when underwater holders stop selling, the coin’s price stops falling. Of course, it could be different (and worse) this time around.

Nonetheless, over the long term, there isn’t anything particularly special about the turbulence and downside happening right now. Nothing has changed about Bitcoin’s supply policies, which means that, over time, fewer coins will be mined per block, and, at least in the past, that has reliably led to its price recovering and rewarding those who were patient.