Despite Friday’s significant drop, Bitcoin’s price remains aligned with the behavior of previous cycles. This is a highly positive sign, providing a clear understanding of the current pullback of the leading cryptocurrency.
The drop of the pioneering digital currency to February lows this Friday caused a wave of panic among investors. Similarly, the FUD (fear, uncertainty, and doubt) led many capital holders to liquidate at losses. However, now that Bitcoin’s price is recovering slightly, some data can be reassuring.
A brief look at price charts from recent cycles shows that the actual price range remains unchanged. Thus, it suggests that the current correction, no matter how severe, is a regular profit-taking process. This is at least from a historical behavior perspective.
In simple terms, alarming assumptions that the bull market is in danger seem exaggerated. How does Bitcoin remain aligned with previous cycles? From the chart below, we can review its price behavior.
Bitcoin’s Behavior Remains Within Usual Cycle Ranges
Although historical behaviors cannot guarantee present and future performances, it is true that the cyclical theory of BTC price has held true. So far, the bullish movements following the so-called winters or bear markets are similar.
From the lowest point of the recent winter at the end of 2022 until now, BTC’s price has risen approximately +250%. Compared to the two immediately preceding cycles, this pattern is remarkably similar. In this sense, during the cycle from 2015 to 2018, the leading cryptocurrency’s return was +234%.
Similarly, in the cycle from the winter of 2018 to the recovery that ended in 2022, the return was +240%, according to Glassnode data.
As can be seen, the data suggests calm, yet it is essential to remember that each context can be different. In current circumstances, new elements complicate any forecasts.
Among the factors keeping Bitcoin’s price under heavy selling pressure are the Mt. Gox repayments. Additionally, other elements include potential liquidations of their reserves by the German government or miner liquidations.
Disclaimer: This work is purely informational and should under no circumstances be considered an invitation or investment advice. Cryptocurrencies are highly volatile assets, and investing in them can lead to total losses.
By Andrej Kovacevic
Updated on 6th July 2024