Bitcoin Breaks the Bank, Slips and Squeals: The Great Discount Saga

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Bitcoin (BTC) recently slipped below $71,000, erasing all the gains since the U.S. presidential election in late 2024. It’s the kind of comeback that would make a soap opera blush and a bear laugh like a hyena at a piano bar.

But wait, one analyst is crying “discount.” He argues the asset is trading at a 41% discount to its long-term trend-like finding a designer suit in a clearance rack at the blockchain mall.

Market Stress and a Growing Valuation Gap

Using a power-law valuation model, market observer David places Bitcoin’s fair value at $122,762, compared with spot prices around $72,000 at the time. That implies a gap of roughly $51,000, or about 41%, which he calls “well below Bitcoin’s normal historical range”-as if the coin wandered into a discount aisle wearing sunglasses.

David’s analysis focuses on the mechanics behind the move rather than macro headlines. He says current price action appears driven mainly by forced flows in derivatives markets, such as hedging and liquidation-related selling, rather than long-term hodlers passing a plate of BTC to the exit sign.

One metric he highlighted was Bitcoin’s z-score, a measure of how far the current price varies from the trend, which he estimated at minus 0.76, suggesting the price has moonwalked far below its typical deviation from the long-term trend.

Positioning data reinforced that view: over the past 30 days, Bitcoin’s price is down about 20%, while open interest has risen nearly 7%, like a crowd at a sale grabbing chairs before the music stops.

David described these trends as a sign that leveraged exposure is increasing even as the price weakens. In his words, price is falling while leveraged bets are growing-a setup that could lead to sharp, forced moves in either direction, faster than a laugh-track can reset.

He also pointed to elevated volatility, with 20-day implied volatility above 43, and combined futures and options open interest of more than $2.3 billion. Under those conditions, he estimated a 70% probability of a squeeze if the price begins to move higher, noting that positioning could “flip very fast.”

Furthermore, he identified the area near $73,000 as a key gamma level, where moves below it may amplify volatility, while moves above it could dampen price swings. In other words, it’s the coin’s own little dramatic cliffhanger.

Price Action Reflects Leverage

At the time of writing, the flagship cryptocurrency was trading around the $70,500 level, according to CoinGecko, marking an nearly 8% drop in the last 24 hours and a close to 20% dip over seven days. In the past month, BTC is down almost 25%, with the losses pushing it 44% below its all-time high from October last year.

This decline triggered a wave of liquidations that hit the market, with data from analytic firm CoinGlass showing that more than 154,000 traders were liquidated in 24 hours, with total losses near $718 million. It’s a liquidation party-just without the cake or the fun.

Another entity significantly affected by BTC’s recent dip is Strategy, which recently purchased 855 BTC for $75.3 million. According to the Kobeissi Letter, the firm’s Bitcoin position has moved deeper into the red, with paper losses rising to $40 billion in the last four months.

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2026-02-05 14:02