Bitcoin has now endured the second-largest correction of this bull market, according to analysts at Bitfinex. The steep decline saw Bitcoin plummet from its all-time high of $109,590 on January 20 to a low of $76,700, marking a 30% drop. Bitfinex attributes this sharp downturn primarily to short-term investors offloading their holdings.
Short-Term Investors Fuel Bitcoin’s Decline
In a research report, Bitfinex identifies short-term investors as those who entered the market within the last seven to 30 days. This group often consists of newcomers to Bitcoin, who, lacking experience with the asset’s volatility, are more prone to panic selling when prices start to fall.
Adding to the downward pressure, capital outflows from Bitcoin ETFs have painted a bleak picture for institutional demand. From March 9 to March 15, total ETF outflows reached $920 million, suggesting that large institutional buyers have yet to return in force—at least not at a level strong enough to counteract the selling pressure.
Currently, Bitcoin has rebounded slightly to $83,400, but the bullish market phase is far from restored. For a true recovery, Bitcoin would need to demonstrate a sustained upward trend, potentially surging past the $100,000 mark to confirm renewed momentum.
Is This the Bottom? Historical Trends Suggest It Could Be
Despite the challenges, Bitfinex analysts remain cautiously optimistic that a market bottom may have been established. Historically, a 30% correction has often marked the turning point in Bitcoin bull cycles. If history repeats itself, Bitcoin could be poised to resume its upward trajectory.
“If Bitcoin stabilizes at this level, past market cycles indicate that a strong recovery may follow,” Bitfinex noted.
However, this scenario remains highly dependent on macroeconomic developments, which have shown little improvement in recent weeks. The market tends to overreact to economic data, so it’s possible that worse-than-expected figures are already priced in, leaving room for a positive surprise in the coming weeks.
On the other hand, geopolitical uncertainties continue to loom large. Concerns surrounding Donald Trump’s potential return, trade conflicts, and ongoing tensions in Ukraine—which have created friction between the US and Europe—add another layer of unpredictability to the global financial landscape.
A Market at a Crossroads
For now, Bitcoin remains at a critical juncture. While historical trends suggest a potential rebound, broader market conditions remain volatile and unpredictable. Until institutional capital returns in full force, and macro risks subside, Bitcoin’s next major move remains uncertain.
Will this 30% pullback indeed mark the bottom—or is there further downside ahead?
The coming weeks will be crucial in determining Bitcoin’s next big move.
