Bitcoin’s slide to $85,000 is pushing the market toward its likely capitulation range, according to André Dragosch, head of research for Bitwise in Europe. He said the cryptocurrency is now approaching what he describes as the “max pain” zone, defined by two critical institutional cost-basis levels that may shape liquidity and sentiment in the weeks ahead.
Dragosch identified the upper boundary around $84,000 — the estimated cost basis of BlackRock’s iShares Bitcoin Trust (IBIT) — and the lower boundary near $73,000, the cost basis for MicroStrategy’s corporate Bitcoin treasury. He suggested that a final cycle bottom is most likely to emerge somewhere between these levels, characterizing the range as a potential “fire-sale” zone where market positioning could fully reset.
ETF redemptions intensify
The cost basis of IBIT represents the average price at which the world’s largest spot Bitcoin ETF acquired its BTC holdings. As Bitcoin’s market price approaches that level, sentiment typically sours, prompting investors to reconsider whether ongoing losses justify redeeming shares. On Tuesday, IBIT saw $523 million in outflows, its largest single-day withdrawal on record, pushing total redemptions over the past month to $3.3 billion, or roughly 3.5% of its assets under management.
Analysts warn that ETF redemptions can amplify volatility because authorized participants may sell physical Bitcoin to meet withdrawals, adding pressure to spot markets. This behavior often accelerates when the market trades near major institutional cost zones.
Strategy faces rising balance-sheet stress
MicroStrategy’s position is even more delicate. The company’s net asset value recently dropped below 1, meaning the market now values its equity at less than the Bitcoin it holds. Historically, this signals growing investor caution and tightening liquidity around corporate Bitcoin treasuries.
A move toward the company’s $73,000 cost basis could deepen that pressure, especially if broader macroeconomic conditions worsen. Analysts note that a retest of this threshold may trigger further de-risking across institutional portfolios, particularly those heavily correlated to Bitcoin.
Despite the bearish signals, Dragosch emphasized that such conditions often mark late-stage cycle behavior. For long-term investors, the “max pain” zone may also represent a significant discount period if the broader bull cycle resumes later.