A recent analysis suggests that sellers have been unable to initiate a classic bull market correction in the current Bitcoin cycle. According to Checkmate, Glassnode's lead on-chain analyst, Bitcoin's price decline has only reached a maximum of 20% despite pulling back from its all-time high near $74,000. This correction, while notable, remains relatively mild when compared to historical bull markets.
Checkmate underscored this point by comparing the current correction to previous cycles, noting that even amidst significant profit-taking and selling pressure at peak levels, sellers have managed to drive the market down by a maximum of 20%. The most substantial correction, occurring in mid-September last year, saw a retracement of only 15.8%, reinforcing the notion of a relatively restrained market downturn.
The analyst expressed favoritism toward a particular Bitcoin chart of the cycle, emphasizing the resilience of the market in the face of selling pressure. Unlike previous cycles, which witnessed multiple retracements exceeding 50%, including the outlier event of the COVID-19-induced crash in March 2020, the current cycle has experienced comparatively modest pullbacks.
However, while acknowledging the statistically anomalous nature of the current cycle, Checkmate also recognized the historical precedents. Despite the absence of a significant correction thus far, there is a sense of inevitability that such a correction may still materialize. Factors contributing to bullish sentiment include the strong buy-side support from the emergence of a U.S. spot Bitcoin exchange-traded fund (ETF) and the decreasing Bitcoin balances on exchanges, suggesting reduced selling pressure.
Reflecting on the remarkable performance of ETFs this week, Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, offered a cautionary note against excessive exuberance. He emphasized the substantial inflows into ETFs, suggesting that without this influx, Bitcoin's price might have experienced significant downward pressure. Balchunas also highlighted the typical investor behavior of net withdrawals from ETF products over several days, indicating the need for a balanced perspective when interpreting market trends.
