Bitcoin’s (BTC) recent decline of 26.62% from its all-time high of $109,500 is poised to become the most significant drawdown of the current bull market cycle, according to Julio Moreno, head of research at CryptoQuant. While this downturn is substantial, it is essential to contextualize it within the history of Bitcoin’s price fluctuations.
Historically, Bitcoin has faced severe drawdowns, with a stark 83% drop from its peak in 2018 and a 73% decline from its all-time highs in 2022. Currently, the 26.62% decrease, while noteworthy, remains less severe than those historical figures. This suggests that the current market correction, although impactful, has not reached the extremes seen in previous cycles.
However, analysts from the crypto and macro resource ‘ecoinometrics’ caution that Bitcoin might confront obstacles in staging an immediate recovery. They noted,
“Historically, when the NASDAQ 100 falls below its long-term year-on-year average return, Bitcoin tends to grow more slowly. It also faces a higher risk of entering a severe correction.”
The NASDAQ 100’s current stagnation year-on-year could hinder Bitcoin’s ability to rebound in price, even if the downward trend is halted. This has raised concerns regarding the strategy of Michael Saylor’s firm, which has opted not to purchase any BTC for its treasury in the recent timeframe due to the price drop.
Recent data indicates that Saylor’s firm has invested $35.65 billion in Bitcoin, reflecting a mere 17% return over a five-year holding period. This withdrawal from purchasing highlights a cautious approach amid volatile market conditions.
Can Bitcoin Maintain Stability Above $70K?
Examining Bitcoin’s weekly chart reveals that it has tested the 50-weekly exponential moving average (EMA) for the first time since September 2024. Historically, closing below the 50-W EMA has indicated the onset of a bear market in past cycles. The immediate price focus lies at $74,000, which represents the early 2024 all-time high, but a more significant demand zone is observed between $65,000 and $69,000, corresponding to its previous all-time high price from 2021.
The weekly relative strength index (RSI) for Bitcoin hit a low of 43 at the end of Q1 2024. Similar RSI recoveries in August 2023 and September 2024 have previously triggered upward price movements. Conversely, when the RSI dipped below 40 in 2022, the market saw bear control. Notably, crypto trader Rekt Capital has predicted that based on current daily RSI trends, a price range from current levels to approximately $70,000 could serve as a bottom during this correction.
This analysis underscores the complexities of Bitcoin’s current market dynamics. It is essential for investors to stay informed and conduct thorough research before making investment decisions, given the risks involved.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making decisions.
