Today, Bitcoin has plummeted from $102,748 to $92,175, which is a 10.3% drop in the last 24 hours.
This development has sparked debates in the community, with analysts drawing parallels to previous market cycles. Historical trends indicate that Bitcoin often suffers major pullbacks a few weeks into its price discovery phase. This has raised concerns that the current recession may be just the beginning.
Historical Perspectives on Bitcoin Corrections
Crypto Analyst Rekt Capital pointed out Bitcoin’s consistent pattern of corrections after rising to price discovery phases. He cited that in 2013, Bitcoin experienced six weeks of upward momentum before facing its first major correction in the seventh week.
Similarly, during the 2017 bull cycle, a 34% pullback occurred in week 8 after seven weeks of consistent gains. Similarly, in the 2020/2021 cycle, Bitcoin rallied for six weeks to price discovery before a significant 16% pullback.
Highlighting these patterns, Rekt Capital noted, “It’s week 7 right now.” This implies that the ongoing correction is consistent with historical trends and that a major pullback could be in the works.
Is there a 20-30% correction on the horizon for BTC?
Adding to the discussion, popular cryptocurrency futures trader Satoshi Flipper emphasized the importance of studying historical patterns. He warned that a powerful correction during the Bitcoin price discovery phase is realistic.
Notably, Bitcoin entered the price discovery phase in the second week of November after Donald Trump won the presidential election. Since then, the asset has seen consecutive days and weeks of new price spikes, with only a few instances of 3% corrections.
Meanwhile, Satoshi Flipper reminded market participants that a 20% to 30% drop for BTC is realistically on the table. Specifically, he highlighted that a 20% drop from Bitcoin’s recent high of $108,000 would result in a bottom of $87,000. Meanwhile, a 30% retracement could see Bitcoin fall as low as $76,000.
Bitcoin has already plunged about 15% from its all-time high to $92,000 and has since recovered to $95,000 at press time, although the danger still remains.
Can Bitcoin defy historical trends?
A recent analysis by Glassnode shows that Bitcoin is now experiencing lower average returns and reduced volatility in the current cycle compared to previous ones.
For example, while Bitcoin saw 10.47x growth in the 2018-2022 cycle, the current season has only seen 598% growth. Likewise, this cycle has been the least volatile, with average falls of -7.68% and maximum falls of -26.25%. Previous cycles have had minimum drops of 26% and maximum drops of 72%.
According to the report, this stability indicates Bitcoin’s transformation into a more mature institutionalized asset, making a decline similar to the last cycle less likely.
