Bitcoin’s Steep Decline May Trigger a December Bounce, According to K33 Research

K33 Research says the market has grown excessively fearful as bitcoin approaches major support zones, suggesting December could present an attractive setup for investors willing to lean into uncertainty.

While bitcoin’s latest downturn has stirred anxiety, analyst Vetle Lunde argues that the move is more indicative of a resetting market than the beginning of a deeper collapse. The cryptocurrency has just undergone its sharpest drawdown since the last bear market, yet K33 believes the current backdrop favors recovery rather than an extended selloff.

Much of bitcoin’s weakness has been driven by structural factors. Spot ETFs—which previously served as the strongest source of demand—shifted into consistent net selling throughout November. Activity on the CME has fallen to multi-year lows, reflecting waning participation from institutional traders. Bitcoin has also lagged equities significantly, posting its weakest relative performance against the Nasdaq since late 2024.

K33, however, argues that traders are overpricing long-term risks and overlooking near-term resilience. “A meaningful move higher is far more credible than a repeat of an 80% crash,” the firm wrote in its December outlook.

Several elements reinforce that view. Bitcoin is now trading near historically strong support between $70,000 and $80,000. Futures positioning is cautious rather than overheated, leverage in perpetual markets remains low, and the latest price decline has not triggered major liquidation cascades.

Concerns about quantum computing, potential selling from MicroStrategy, or Tether-related instability may grab attention, but K33 stresses these are long-horizon risks—unlikely to affect markets in the near term and not valid drivers of current pricing.

Instead, the firm points to a shifting policy landscape that could offer additional support. Potential 401(k) access to crypto and a more accommodative, crypto-friendly Federal Reserve stance could improve fundamentals moving into 2025. In K33’s assessment, bitcoin is currently priced on fear, not reality.

Investor sentiment remains hesitant for now, but K33’s framework suggests December may open a window for those ready to position ahead of a potential rebound.