Today, Bitcoin has plunged from $102,748 to $92,175, marking a 10.3% drop in the last 24 hours.
This development has sparked discussions in the community, with analysts drawing parallels to previous market cycles. Historical trends indicate that Bitcoin often undergoes significant pullbacks a few weeks into its price discovery phase. This has raised concerns that the current downturn may only be the beginning.
Historical Insights into Bitcoin Corrections
Crypto analyst Rekt Capital pointed out Bitcoin’s consistent pattern of corrections after rallying into 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% retracement occurred in Week 8 after seven weeks of consistent gains. Likewise, in the 2020/2021 cycle, Bitcoin rallied for six weeks into price discovery before a meaningful 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 crypto futures trader Satoshi Flipper emphasized the importance of studying historical patterns. He warned that a powerful correction during Bitcoin’s 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 peaks, with only a few instances of 3% corrections.
Meanwhile, Satoshi Flipper reminded market participants that a 20% to 30% crash 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 at $87,000. Meanwhile, a 30% retracement could see Bitcoin falling as low as $76,000.
Already, Bitcoin has crashed by approximately 15% from its all-time high to $92K and has since rebounded to $95K at press time, though the danger still remains.
Can Bitcoin Defy Historical Trends?
A recent analysis by Glassnode shows that Bitcoin is now seeing lower average returns and reduced volatility in the current cycle compared to previous ones.
For instance, 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 drawdowns of -7.68% and a maximum of -26.25%. Previous cycles have had minimum drawdowns of 26% and maximum crashes of 72%.
According to the report, this stability indicates Bitcoin’s transformation into a more mature, institutionalized asset, making the likelihood of a crash similar to the last cycle less likely.