The Bitcoin market has entered a pivotal phase as recent price action and derivatives data point to growing confidence among investors that the cryptocurrency may have found its floor at $40,000. After a sharp correction from its all-time highs near $69,000 in November 2021, Bitcoin briefly dipped below the psychologically significant $40,000 mark in early 2025—the first time since September of the previous year. However, instead of spiraling further, the market has stabilized, and options activity now suggests a shift in sentiment from fear to cautious optimism.
This stabilization has sparked renewed debate among analysts and traders: is $40,000 truly a long-term bottom? And could this moment mark the beginning of the next major leg upward?
Market Stabilization and Options Activity Indicate Shift in Sentiment
One of the clearest signs of shifting investor psychology comes from Bitcoin’s options market. According to Genesis Global Trading, the skew—a measure of the difference in implied volatility between put (bearish) and call (bullish) options—has recently dropped from double-digit levels to nearly zero. This indicates a significant decline in demand for downside protection and a rising appetite for upside exposure.
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As Noelle Acheson, head of market insights at Genesis, explained:
“All else being equal, this change in preference could be supportive for BTC prices.”
When traders stop buying puts en masse and start positioning for rallies through calls, it often reflects growing confidence that the worst is over. Such behavior tends to precede sustained recoveries, especially when aligned with other technical and on-chain indicators.
Technical and On-Chain Indicators Support a Long-Term Bottom
Beyond derivatives, several fundamental metrics suggest that Bitcoin may indeed be forming a durable base around $40,000.
Martin Gaspar and Katherine Webb of CrossTower highlighted the Bitcoin Reserve Risk metric—an on-chain indicator that assesses long-term holder confidence. They noted that current levels are lower than those observed during the July 2021 market bottom, placing the asset firmly in a “buy” zone. A low reserve risk implies that long-term holders are not selling at a loss, signaling strong conviction and reduced selling pressure.
Additionally, veteran analyst Mike McGlone of Bloomberg Intelligence described $40,000 as a “critical inflection point.” He believes that once Bitcoin regains momentum, the next major target will be $50,000—followed by a resumption of the long-term bull run toward his projected $100,000 level.
“Demand and adoption are rising while supply is decreasing,” McGlone said. “Unless the trend of increasing Bitcoin adoption reverses, economic fundamentals suggest higher prices ahead. The trajectory remains favorable.”
This view is echoed by Jonathan Padilla, co-founder of Snickerdoodle Labs, who attributes the current resilience to a structural shift in market composition: institutional participation.
“Institutions are entering the market now—not retail traders driving speculation like in 2017 and 2018,” Padilla noted. “This reflects stronger buying power and sustained demand over time.”
Why Institutional Involvement Matters
The nature of capital flowing into Bitcoin has evolved dramatically over the past few cycles. In previous downturns, retail-led sell-offs often extended bear markets. Today, however, institutional investors—hedge funds, asset managers, and publicly traded companies—are accumulating during dips.
Their longer investment horizons and strategic allocation models mean they're less likely to panic-sell during volatility. This structural support helps cushion major drawdowns and contributes to faster stabilization after corrections.
David Tawil, president of ProChain Capital, emphasized that while he was watching for support near $38,000, the broader macro context remains crucial.
“A bounce in U.S. tech stocks would be a strong signal that risk assets like Bitcoin have bottomed,” Tawil said. “At these levels, especially if we see recovery momentum build, this could set up for over 50% gains within a year.”
Macro Challenges Remain: Volatility and Correlation with Equities
Despite growing optimism, challenges remain. Clocktower Group’s chief strategist Marko Papic cautioned that Bitcoin’s high correlation with the S&P 500 over the past 12 months suggests it still behaves like a high-beta risk asset—particularly sensitive to Federal Reserve policy shifts.
“If the Fed turns more hawkish,” Papic warned, “crypto markets are likely to remain volatile.”
He advises investors to favor assets more tied to global value and economic growth over speculative holdings in the near term. For him, the next 3–6 months may not be ideal for aggressive exposure to digital assets.
Yet even within this cautious framework, Papic acknowledges that Bitcoin’s unique supply cap and increasing adoption could eventually decouple it from traditional markets.
Core Keywords Driving Market Analysis
Key terms shaping current discourse include:
- Bitcoin price prediction
- BTC options market
- $40,000 support level
- Bitcoin institutional adoption
- Cryptocurrency market bottom
- Bitcoin reserve risk
- BTC volatility skew
- Long-term Bitcoin outlook
These keywords reflect both technical analysis themes and macroeconomic concerns influencing trader behavior today.
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Frequently Asked Questions (FAQ)
Q: Why is $40,000 considered a key support level for Bitcoin?
A: The $40,000 level has acted as strong psychological and technical support multiple times since 2021. It aligns with major moving averages and on-chain valuation models like NUPL and reserve risk, reinforcing its importance.
Q: What does a drop in options skew mean for Bitcoin’s price?
A: A declining skew means traders are buying fewer put options (protection against drops) and more call options (bets on rallies), signaling increased bullish sentiment and potential upward momentum.
Q: Are institutions really buying Bitcoin during this dip?
A: Yes—evidence from on-chain flows, ETF inflows (where available), and corporate treasury activity shows consistent institutional accumulation during recent price declines.
Q: Could Bitcoin reach $100,000 again?
A: Multiple analysts project BTC will eventually surpass its previous all-time high. Factors like halving-driven scarcity, growing adoption, and macro hedging demand support this long-term view.
Q: How does Bitcoin’s correlation with stock markets affect its outlook?
A: High correlation with equities—especially tech stocks—means Bitcoin can suffer during risk-off periods. However, this link may weaken over time as crypto matures into a distinct asset class.
Q: What indicators should I watch to confirm a market bottom?
A: Monitor on-chain metrics like reserve risk, exchange outflows, and active addresses; derivatives data like funding rates and options skew; and macro signals such as Fed policy and equity market trends.
Looking Ahead: From Stabilization to Next Bull Phase?
While uncertainty persists in the short term, the confluence of stabilizing derivatives markets, favorable on-chain signals, and steady institutional interest paints an increasingly constructive picture for Bitcoin’s future.
The $40,000 level may not just be a temporary floor—it could represent the foundation for the next phase of growth. As supply continues to tighten post-halving and global awareness expands, many experts believe the long-term trajectory remains firmly upward.
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Whether you're a long-term holder or an active trader, understanding these dynamics—from options skew to on-chain health—is essential for navigating what could be one of Bitcoin’s most transformative years yet.