Bitcoin’s 22% Drop a Temporary ‘Shakeout,’ Not a Bull Cycle End, Say Analysts

Bitcoin’s recent 22% correction from its all-time high of over $109,000, recorded on January 20, has sent investor sentiment plummeting into ‘Extreme Fear.’ However, analysts believe that the drop is merely a temporary shakeout rather than the end of the cryptocurrency’s four-year cycle.

According to data from Cointelegraph Markets Pro, Bitcoin’s price briefly fell to $83,428 but staged a daily close above $84,000 on March 15—a move that suggests a potential price recovery.

“Corrections within bull cycles are normal, and past trends suggest that this may be a shakeout rather than the start of a prolonged bear market,” analysts from Bitfinex told Cointelegraph.

Institutional Adoption Weakening Traditional Market Cycles

Bitcoin’s historical four-year cycle—typically defined by periods of exponential growth followed by corrections—has played a significant role in price action. However, some experts argue that the increasing presence of institutional investors and spot Bitcoin ETFs is altering Bitcoin’s traditional market behavior.

Since their launch, U.S. spot Bitcoin ETFs have temporarily surpassed $125 billion in cumulative holdings, highlighting strong institutional demand. Analysts suggest this demand may prevent a deep market correction, even in the face of Bitcoin’s recent downturn.

Bitcoin’s Correlation with Traditional Markets

Despite bullish indicators, Bitcoin’s next move remains tied to broader financial markets, particularly the S&P 500 and global treasury yields.

“While $72,000–$73,000 remains a key support range, the broader market narrative, especially global treasury yields and equity trends, will dictate Bitcoin’s next major move,” Bitfinex analysts noted.

Additionally, ongoing economic uncertainties and trade wars have already been factored into Bitcoin’s price to some extent. However, prolonged economic strain could weigh on investor sentiment and impact BTC’s recovery.

Bitcoin Halving and Four-Year Cycle Still Key Price Drivers

While some question the validity of Bitcoin’s four-year cycle due to increased institutional influence, analysts emphasize that the Bitcoin halving remains a crucial driver of long-term price action.

“Bitcoin’s four-year compound annual growth rate (CAGR) has declined to a record low of 8%, posing questions about whether its traditional four-year cycle remains valid,” said Iliya Kalchev, dispatch analyst at Nexo.

However, Kalchev noted that Bitcoin halving events continue to exert a long-term influence on price movements. The 2024 Bitcoin halving, which reduced block rewards to 3.125 BTC per block, has played a major role in Bitcoin’s 31% price increase since April 20, 2024.

As Bitcoin navigates this period of volatility and market uncertainty, analysts remain optimistic that historical patterns will hold, setting the stage for the next leg up in the bull cycle.