Coinbase Research: Bitcoin Breaks Key Support, Market Possibly in Early Stage of Long-term Downtrend

Research firm Ned Davis Research noted that two historically rare market divergence signals have emerged simultaneously in the U.S. stock market recently: the Philadelphia Semiconductor Index (SOX) has continued to hit new highs, while the "Magnificent Seven" tech giants have lagged significantly; and the Dow Jones Industrial Average and Nasdaq Composite Index have shown notable trend divergence. Historical data indicates such situations often occur near key market inflection points. As of mid-June, on a 26-week rolling basis, the SOX has outperformed the Bloomberg Magnificent Seven Index by over 100 percentage points, with their correlation dropping to its lowest level since the end of 2021. Ned Davis Research pointed out that a similar divergence occurred in 2021, after which the Magnificent Seven and semiconductor sectors peaked successively, and the U.S. stock market entered a bear market in 2022. Meanwhile, in the seven trading days leading up to June 25, the Dow rose 0.5% while the Nasdaq fell 5%, marking a 5.5 percentage point gap in their rolling performance. Since the Nasdaq’s launch in 1971, such a large divergence has only appeared in roughly 1% of trading days. Historical statistics show that after similar divergences, the probability of the market being in a bear market over the next three months is around 66.9%, significantly higher than the historical average of 24.8%. However, the firm stressed that the above statistical patterns do not mean a bear market is inevitable. The current market rally lacks broad participation, and divergence across sectors continues to widen. Investors should closely monitor whether the aforementioned divergences intensify further and take timely risk management measures.

Swan Bitcoin CEO Cory Klippsten stated that Bitcoin Long-Term Holder (LTH) holdings have hit an all-time high. This metric has historically coincided with market cycle bottoms, suggesting Bitcoin could bottom earlier in this cycle compared to previous ones. Per Glassnode data, long-term holders hold approximately 14.7 million Bitcoins, an all-time peak, indicating veteran investors retain strong confidence in holding the asset. Klippsten believes this trend signals the market bottom may arrive sooner. However, not all share this view. Jiang Zhuoer, founder of Lebit Mining Pool, previously noted Bitcoin may bottom between October and December 2026. He explained that Strategy (formerly MicroStrategy)’s mNAV (market value relative to Bitcoin reserves net asset value) typically bottoms roughly six months ahead of Bitcoin; currently, the metric stands at 0.72, near the 2022 bear market low of 0.7, leading him to project this cycle’s Bitcoin bottom will land in the $42,000 to $44,000 range. Separately, Zach Pandl, head of research at Grayscale, warned that if the U.S. CLARITY Act fails to pass this year, Bitcoin reserve firms like Strategy may continue deleveraging, adding further downward pressure to Bitcoin prices. Galaxy Digital has also lowered the probability of the bill being enacted by 2026 to 50%, citing a limited time window for the U.S. Senate to advance related legislation before its August recess.

A recent U.S. Supreme Court ruling confirms that Federal Reserve governors retain personnel protections requiring removal only for just cause, barring the president from dismissing them at will, thereby preserving the independence of the Federal Reserve’s monetary policy. However, the Supreme Court also ruled that the president may remove commissioners of other independent regulatory agencies, such as the Federal Trade Commission (FTC), without cause, overturning long-standing legal precedents applicable to independent agencies, leaving the Federal Reserve as almost the only federal agency still entitled to special personnel protections. Kathryn Judge, a professor at Columbia Law School, noted that while the Federal Reserve’s independence has been preserved, its legal foundation has weakened significantly over the past decades, and it will need to continuously explain to the public the rationale for its special status. Former Federal Reserve Vice Chair for Supervision Randal Quarles has previously pointed out that retaining special personnel protections only for the Federal Reserve creates a legal inconsistency, and the institution may still face new judicial challenges in the future. He argued that given the court’s finding that most independent regulatory agency officials fall under the executive branch and are removable by the president, the question of why the Federal Reserve is an exception remains a legal issue that requires further clarification.

StarkWare has unveiled a quantum-resistant roadmap for Starknet, divided into three phases to counter future quantum computing attack risks. The first phase involves replacing part of the existing Pedersen hash (a security mathematical mechanism) with quantum-resistant versions, and adding quantum-resistant signatures. The second phase focuses on migration tools that enable upgrades to existing smart contracts without requiring developers to manually rebuild their applications. The third phase covers dependencies that Starknet cannot resolve independently, and is primarily contingent on Ethereum’s quantum upgrade roadmap.

CME Group announced the launch of products including standard and micro contracts for more than 50 leading U.S. stocks. The new offerings will consist of 55 large-scale contracts and 22 micro futures contracts, with tradable underlying assets covering Alphabet, Amazon, Apple, Meta, Nvidia, and SpaceX.

Wall Street investment bank TD Cowen has cut its price target for Bitcoin-focused firm Strategy (STRC) from $400 to $260, a roughly 35% reduction, while retaining its "Buy" rating. The firm described the digital credit capital framework unveiled by the company on Monday as a "gradual positive" for credit visibility and capital flexibility. Analysts clarified that the target cut stems primarily from adjustments to Bitcoin price forecasts, not the framework itself. TD Cowen lowered its end-2026 Bitcoin price projection from ~$140,000 to ~$100,000, and its end-2027 forecast from $190,000 to ~$135,000. The $260 price target still implies over 200% upside from Strategy’s Monday closing price of $92.68, a gap analysts admit "may appear unrealistic." Regarding the new framework, Strategy has rebuilt its U.S. dollar reserves to $2.55 billion. The company issued over 12 million common shares in the past week and did not purchase any Bitcoin. TD Cowen said this move helps restore investor confidence in the company’s ability to weather long-term Bitcoin downturns. Current reserves cover more than 17 months of minimum preferred stock dividend and interest obligations; adding the authorized Bitcoin monetization capacity brings that coverage to roughly 26 months. The firm also approved up to $1 billion in preferred stock repurchases and $1 billion in common stock repurchases. TD Cowen noted this marks a shift for Strategy from one-way share issuance to active capital structure optimization. The Bitcoin monetization plan is capped at $1.25 billion, with proceeds earmarked to replenish U.S. dollar reserves. Additionally, STRC’s preferred stock dividend rate was raised from 11.5% to 12% to stabilize its trading price near its $100 par value. The security recently traded at a 26% discount to par due to Bitcoin’s price decline.