Is Shorting Bitcoin to $40K Plausible in 2025?

Overview

Speculation has resurfaced that Bitcoin (BTC) could fall substantially from recent levels, with one widely shared chart suggesting a potential path down toward $40,000. The graphic compared current price action to a prominent 2022 breakdown and portrayed a seemingly clean continuation pattern for traders considering short exposure.

At MEXC, we assess that while the pattern bears technical resemblance to historic moves, the full picture is more nuanced. This article unpacks the setup, explains why an extreme short-target narrative can be misleading, and offers a balanced set of technical and market signals to watch through 2025.

The bearish technical setup being discussed

The chart that circulated highlighted a few core elements:

• A rejection at a major resistance zone near the prior multi-month highs.
• A drop below the weekly EMA50, a moving-average level frequently referenced by traders as a midterm pivot.
• An overlay comparison showing a similar sequence to the 2022 decline that preceded a prolonged accumulation phase.

When mapped onto current prices, the implied path points toward a significant retracement — in some scenarios erasing much of the past two years of gains. A move to roughly $40,000 from levels near the low six figures would represent a decline in the order of 50% or more.

Why the pattern looks compelling

• Historical precedence: price structures that reject major resistance and fail to reclaim key moving averages have in the past led to extended range formation.
• Technical symmetry: overlay analyses can create the impression of a predetermined trajectory when recent candles closely match earlier sequences.
• Psychological impact: a widely circulated chart can influence trader behavior, increasing selling pressure if many act in concert.

Why the “perfect short” narrative can be misleading

Market observers and even the originators of such charts often clarify that provocative targets are deliberately exaggerated to highlight a risk scenario, not to predict a literal endpoint. Several factors temper the idea of a straight-line crash to $40,000:

• Markets rarely move in perfectly mirrored cycles. Structural similarities do not guarantee identical outcomes.
• Key moving averages — such as weekly EMA50 and EMA200 — frequently act as dynamic support/resistance and can trigger short-term flushes (sweeps) rather than denote the end of a trend.
• Liquidity dynamics, order flow and institutional participation can blunt or reverse technically bearish moves.

In other words, a short bias rooted in the current structure is a valid trade idea for some traders, but it should not be read as a certainty that price will reach any single price target without intermediate tests and potential invalidation points.

Key technical levels and indicators to watch

For traders and investors weighing the downside thesis, these are the primary levels and indicators to monitor:

• Weekly EMA50: A failure to reclaim this moving average is commonly used as evidence of ongoing distribution. A decisive weekly close above it would undermine the most bearish interpretations.
• Weekly EMA200: Acts as a major long-term structural support. A touch or sweep of this level can occur within healthy bull cycles and does not necessarily signal a bear market.
• Major psychological zones: Price areas such as $100,000 (recent resistance) and $40,000 (historical support/accumulation region) are magnet levels for traders.
• Accumulation ranges: Volume profile and prior consolidation bands give context for where buyers may step in if selling intensifies.
• Derivatives signals: Funding rates, open interest and liquidations can accelerate moves; crowded long positions with rising volatility create “blow-off” risk and vice versa.

On-chain metrics and order-flow cues

Traditional technicals are usefully complemented by on-chain and market structure data:

• Exchange reserves: Falling exchange balances have historically supported higher prices; rising inflows can increase sell-side pressure.
• Realized price and supply in profit: High proportions of supply in profit can indicate vulnerability to capitulation under stress.
• Long/short ratios and futures basis: Extreme positioning can trigger leveraged liquidations and quick moves through perceived support zones.

2025 market context — what’s different this year

Understanding 2025 macro and crypto-specific developments helps frame how a downside scenario might play out:

• Post-halving supply dynamics: The 2024 halving continued to tighten nominal new supply, a factor that remains relevant in 2025 as miners and long-term holders adjust positions.
• Institutional participation: Spot ETF flows and institutional adoption trends have been meaningful liquidity forces. By 2025, inflows have generally moderated from initial post-listing surges, but continued institutional custody demand can act as a price floor.
• Regulatory landscape: Ongoing regulatory clarity and enforcement actions in major jurisdictions influence capital flows and exchange behavior in 2025.
• Macro backdrop: Global liquidity conditions, central bank rate decisions and equity market correlations are influencing crypto volatility more than in earlier cycles.
• Market maturity: Increased use of options and structured products means downside moves can be mitigated or amplified depending on how market makers and funds hedge exposure.

These factors make a straight-line repeat of prior cycle behavior less likely. Instead, expect more complex interactions between technical levels, institutional flows and macro news in any major move.

Practical trading and risk-management approaches

If traders wish to express a bearish view while managing risk, several approaches are prudent in 2025:

• Short with predefined stops: Use clear stop-loss levels relative to your risk tolerance and trade size. Volatile markets can produce fast reversals.
• Options strategies: Buying puts or using spreads can offer defined downside exposure without unlimited risk from naked shorts.
• Hedging long positions: Rather than outright shorting, consider hedging existing long exposure to protect against drawdowns.
• Scale into positions: Build exposure over time as price confirms structural moves (e.g., confirmed weekly close below EMA50).
• Watch funding and liquidity: High negative funding can deter shorts; crowded positioning increases liquidation risk in either direction.

Ultimately, position sizing and loss-limitation rules are the most important elements in navigating potentially large intramarket moves.

Scenarios that would invalidate a deep downside move

A number of developments could undermine the thesis that Bitcoin is headed to $40,000:

• Clean reclaim of weekly EMA50: A sustained weekly close above this moving average would weaken the bearish pattern and often precedes renewed upward pressure.
• Renewed institutional inflows: Large spot purchases or renewed ETF demand could create a price floor and reverse selling momentum.
• Positive macro surprises: An easing of monetary policy risk or improved risk appetite in equities and credit markets can lift crypto along with broader risk assets.
• On-chain accumulation: If long-term holders reduce selling and accumulation on exchanges declines, the available supply to push price materially lower shrinks.

Takeaway

Charts showing a path to $40,000 serve as a useful reminder that risk is always present, but they are not deterministic forecasts. The technical resemblance to prior breakdowns merits attention, yet the 2025 market operates with different liquidity, institutional participation and macro influences than earlier cycles.

For traders, the message is straightforward: treat the bearish setup as one possible scenario among several, define your risk, and monitor the moving-average pivot levels and on-chain signals that most often differentiate a temporary sweep from a sustained trend reversal. MEXC encourages market participants to combine technical analysis with macro and on-chain context, and to use risk-management tools to navigate volatility.

Disclaimer: This post is a compilation of publicly available information.
MEXC does not verify or guarantee the accuracy of third-party content.
Readers should conduct their own research before making any investment or participation decisions.