The Bitcoin “buy zone” meme is a reality again, and what it means in the ETF era
Certain Bitcoin posts will appear on time. It usually arrives just after the price stops feeling fun.
This week comes from PricedinBTC, organized into a neat table titled “Forward Returns by Drawdown Level.”
The headline number plays an important role, and if you buy at a 50% drawdown, your odds of winning next year will probably be around 90%, with an average return closer to 125%. The caption ends with the words “LOCK IN,” which sounds like advice but also reads like a challenge.
People share these graphs for the same reason they bookmark their workout plans. Drawdowns confuse the brain, even for holders who have vowed not to feel anything. Clean rules provide a remedy, a way to draw the line, that allows you to act without rehashing the entire argument every time prices fall.
This is widespread at a time when mathematics is almost a meme. Bitcoin is trading in the low $60,000s, with its last peak still hanging over the market. This results in drawdowns in the mid-40% range, which can be pushed into the -50% range with sustained pressure.
Charts make declines feel like destinations, and history provides solace. That same history also comes with a warning label. According to iShares research, since 2014, there have been four cases with drawdowns of more than 50%, with the three largest having average declines of about 80%, and three out of four cases taking nearly three years to recover.
The gap between “one year from now” and “surviving it” is where a lot of confidence is tested. Currently, that testing is being performed through new plumbing, spot ETFs, interest rate forecasts, dollar and option hedging, all visible in real time.
The minus 50% line feels like a promise and is right around the corner
Using the last peak above $126,000 as a reference point, the level hits a familiar spot. Minus 50% is about $63,000, minus 60% is about $50,000, and minus 70% is about $38,000. Bitcoin is close to $68,000, so the first line is within a few thousand dollars.
That proximity turns numbers into plans. Some people wait for their tags to arrive and start piling up cash. Some people buy early so they don’t miss out. Some people freeze when the chart finally arrives because the descending sound seems louder than what’s on the screen.
Memes act as psychological tools because they compress chaos into simple triggers.
The moment the trigger hits, the lived experience expands again and the drawdown continues to move. iShares’ drawdown history is important here. Because it points to a deeper truth. Many “winning” entries remained in doubt for a long time, sometimes accompanied by even more severe declines, until a recovery appeared.
Winning with Bitcoin is not as easy as buying Bitcoin early. Anyone who’s been around for more than 10 years probably has at least one story about a time that came too soon. I certainly think so. I have a 7 digit HDMI cable lying around that I bought using Dogecoin in 2014.
ETFs turned declines into daily income
The Spot Bitcoin ETF now has a scoreboard that everyone can see every day. The US Spot Bitcoin ETF held approximately 1,265,000 BTC as of the market close on February 13th, with assets under management of approximately $87 billion.
This size changes how the drawdown moves through the market. Large wrappers can support prices during calm periods, and can also amplify selling pressure when flows turn negative, as shifts are visible, measurable, and easy to track.
There has been a net outflow of approximately 55,665 BTC in the past 30 days, with a multi-billion dollar change in the prevailing price. This type of outflow can keep prices weighing down even when social feeds are full of confidence in the “buy zone.”
It also provides buyers on the edge with another confirmatory tool of stabilizing flows, as declines often manifest as a slowing, flattening, and ultimately reversal of outflows.
Interest rates and inflation form opportunity costs
Much of Bitcoin’s next chapter will depend on macroeconomic conditions that look unattractive, including yields, inflation trends, and how investors assess risk overall.
In late January, the Fed kept its target range unchanged at 3.50% to 3.75%. Inflation is also easing, with U.S. inflation at 2.4% in January, a data point driven by lower interest rate expectations and a shift in risk appetite.
Cross-market agents can help shape that tone. The S&P 500 proxy SPY reads broad risk appetite, long-term Treasuries via TLT reflects the interest rate backdrop, and gold via GLD captures defensive bids.
When these markets tilt towards safety and yield, Bitcoin drawdowns often feel more weighty, and as the mood shifts towards easing, bullish buyers tend to find more oxygen.
The options market is pricing wide lanes.
Viral tables feel calmer on the page, and options markets tend to be more broadly speaking. On Unusual Whales, Bitcoin options have an implied move of approximately 6.66% through February 20th, with an implied volatility of approximately 0.5656.
Implicit high movements influence behavior in overt ways. Dip buyers want clean levels and quick confirmation. When conditions of high uncertainty persist, the hedger remains active.
Short-term fluctuations become part of the baseline, and the -50% line may become a through point rather than a floor.
This goes back to iShares’ long drawdown record. Because large-scale recoveries often involve confusing paths and long timelines.
Drawdown strategies live and die by whether the buyer can handle the path, not just the endpoint.
The next chapter will have 3 lanes and levels for people to watch
The clearest way to develop a short-term perspective is to connect each to a signal that everyone can track, as a conditional lane.
- In the hard base case, Bitcoin remains in the low-to-mid $60,000s, the market fluctuates, ETF outflows moderate to a flattening, and volatility declines. Flow tape is the evidence here, as a 30-day decline in outflows typically signals waning selling pressure.
- In the liquidity-friendly case, inflation remains moderate, interest rate cut expectations are solidified, and risk appetite improves across markets. Bitcoin could pull back towards its previous highs as ETF flows reverse and remain positive.
- In a case of a deeper capitulation, the outflow continues, macros turn off the risk, Bitcoin slides through the -50% line towards the $50,000 zone, and the pressure could extend to deeper drawdown levels.
Buy Zone Memes provide a simple story and the market provides conditions. Useful versions of this chart can be found next to the real-time scoreboard, ETF flow tape, interest rate background, and uncertainty gauge.
That is the true human interest angle in this cycle. That is, the emotional drive for clean rules and the institutional mechanisms that shape how those rules play out in real time.
Strategic dollar-cost averaging and market timing
Historically, this part of the cycle is the best time to buy Bitcoin. But as we’ve said many times in our analysis over the past eight months, “this time is different.”
The four-year cycle theory can be legitimately questioned. Six percent of the supply is held in US ETF funds, and corporate treasuries are exploding.
This is different from the Bitcoin market of 2012, 2016, 2020, or even 2024.
Personally, I’m such an emotional trader that I stopped trying to time the market years ago.
One methodology that removes the risks associated with market timing is strategic DCA.
You buy BTC every day, but you send slightly more BTC to the exchange than your daily purchases. This leaves you with excess cash that grows over time. That way, when Bitcoin drops to a price that looks cheap, you have some funds available to buy the push. You have already allocated those funds to Bitcoin. I just don’t pull the trigger until I’m depressed. This way you get the benefits of DCA smoothing, enhanced by larger allocations during drawdown.
Historically, Bitcoin rarely stays below previous cycle highs for long periods of time. For $68,000, it’s OK for 2021. In 2022, Bitcoin stayed below its 2017 high for about 30 days before starting to rise to $126,000 over the next three years.
Again, none of this is intended to be investment advice to individuals, and any investment involves risk. However, this article touches on what, in my opinion, Bitcoin investors should consider when deciding when, and how, to increase the Bitcoin allocation in their portfolio.
(Tag translation) Bitcoin
