In the last 20 days we’ve closed the BTC price on a red weekly candle, showing a significant correction of the price. This may be terrifying to new traders, especially if they have entered the market near the recent ATH at over 40$. This may indeed be scary in the short term, but for longer term holders perhaps it should not be that scary.
So far we’ve had very clear and consistent market cycles of the BTC price. As we can clearly see on the picture below, the Bitcoin cycle has followed a strict pattern during the cycles that can be separated by the BTC halving dates.
What are the current concerns?
Currently, we are down nearly 30% from the ATH reached on Jan 7:
It’s possible that the correction that is going on now breaks further down than 40% – 50 or even 60%. The backing for this is also the existence of CME gaps, that need to be filled with actual market movement sooner or later.
The first bigger CME gap is at around $25k, which would be a 40% correction, and after that – at under $20k, which would be a correction of over 50%.
What could this mean?
In this case there are speculations that the bull run might be over, or that there might be a period of bearishness in the middle of it, that could last several months – according to crypto expert channel The Moon.
What is the upside?
Such huge corrections are no stranger to BTC market bull cycles. During the 2017 bull run, there was a 40% correction that lasted 70 days, however the price didn’t get lower than 40% below the ATH during that period.
In some respects, such corrections are healthy after the bull market has started, because the market consolidates after the previous ATH, perhaps preparing for another upward break. In addition, this is also a period in which the price can slow down and consolidate with the 20 and 50-day moving averages, between which the market is right now:
Looking at the NUPL chart, we have also not yet touched the final stage of market euphoria, marked here in blue, which has been reached during previous market cycle highs:
When the BTC price was at this point during the last Bull Run, it did a further 1000% growth from $2,000 to $20,000, but, of course, past performance is not indicative of future results.
Another fundamentally new indicator within the current market conditions is the interest and purchasing power of both institutions, and recently, even public companies.
Some of the purchases, such as the Crypto Miner Marathon Patent Group $150M BTC purchase, averaged $31k, which means that the trust for BTC to go significantly higher than that is… well, significant.
In addition, MicroStrategy’s CEO Michael Saylor, famous for investing more than $1b in BTC, is holding a Bitcoin conference for SP500 CEOs at the start of February (3rd and 4th), where he is going to essentially pitch his company’s bitcoin holding strategy to other public companies.
This will likely be another bullish event for the market that can help make BTC even more mainstream and a tempting investment opportunity. If public companies decide to purchase BTC (at a price of around $30k – 50% above the previous ATH!) and hold cryptocurrencies as part of their treasury, this can mean a lot for BTC’s long-term market potential.