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The Crypto Basic 2025-03-12 08:48:20

Here’s Why the Bitcoin 22% Drawdown is Different from Other Cycles

Recent analytical insight highlights the contrast between the recent Bitcoin double-digit crash this bull season and similar price actions in previous cycles. Bitcoin crashed to $76,600 yesterday after closing below $80,000 the previous day for the first time since November. While the asset recovered to close at almost $83,000 yesterday, it has corrected over 22% from its January 20 all-time high of $109,000.Amid the uncertainties, market analytical provider CryptoQuant has highlighted that this magnitude of corrections is not new during the bull market run. Nonetheless, it cited developments that inferred that this cycle’s 22% capsize might differ from previous scenarios.Bitcoin At Bearish TerritoryIn a March 11 report , an analysis from CryptoQuant concluded that Bitcoin’s short-lived dump below $80,000 has now placed it in bearish territory. Notably, other indicators support this disposition, as highlighted by the Bull-Bear Market Cycle (BBMC) indicator and the Market Value to Realized Value (MVRV) ratio.The analysis highlighted that the BBMC indicator has reached the most bearish levels ever seen in this cycle, although Bitcoin has experienced a steeper correction than this since 2023. For perspective, the pioneering cryptocurrency corrected a staggering 32% from its March 2024 peak of around $73,000 to below $50,000 in August 2024. Bitcoin's Dip in the Last Two Cycles Furthermore, the MVRV ratio Z-score has dropped below its 365-day moving average, signaling a complete loss of bullish momentum. CryptoQuant noted that such valuation metrics drift usually suggests a massive decline or the start of a bear market.To add to the bearish developments, investors have extensively pulled funds from the US spot exchange-traded funds (ETFs) recently. With a net outflow of $371 million yesterday, the investment vehicles have recorded their seventh consecutive negative flow day and the 15th in the last 16 days.https://twitter.com/thecryptobasic/status/1899693116031996244Possible Bitcoin Correction to $63kWith the predominant bearishness and the valuation metrics flashing negative signs, the analysis suggested that Bitcoin appears to be in a deeper correctional phase than typical in a bull market. Furthermore, it highlighted the levels Bitcoin could capitulate to if the current price zone fails to hold.CryptoQuant noted that Bitcoin could crash 23% from its current valuation to $63,000 if the levels between $78,000 and $75,000 fail to hold. Notably, this zone lies slightly below the trader’s on-chain realized price lower band, an area that has historically served as a cushion for lower prices during intense bull market corrections.Meanwhile, the analysis follows BitMEX co-founder Arthur Hayes' insistence that a crash to $70,000 is normal in the bull cycle and the market could still recover from such a dip. Bitcoin trades at $82,519, down slightly in the past 24 hours.

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