Bitcoin's 22% Correction May Be Temporary Shakeout, Analysts Say

Bitcoin's historic bull cycle remains intact despite the current correction, which analysts suggest may be a temporary "shakeout" before the next upward movement. The price of Bitcoin has decreased by 22% from its all-time high of over $109,000, recorded on January 20. Despite investor sentiment dropping into "Extreme Fear" multiple times, historic chart patterns indicate that this could be a price shakeout, characterized by a sudden price drop due to multiple investors exiting their positions, followed by a sudden price recovery.

Several key technical indicators have turned bearish, leading to speculation that the bull cycle may be ending prematurely. However, analysts from Bitfinex emphasize that Bitcoin's 4-year cycle remains a crucial factor in shaping price movements. 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.

The launch of US spot Bitcoin exchange-traded funds (ETFs), which temporarily surpassed $125 billion in cumulative holdings, along with growing institutional crypto investments, indicates that the conventional cycle may no longer be applicable. In an optimistic sign for price action, Bitcoin staged a daily close above $84,000 on March 15, for the first time in over a week.

Bitcoin's correlation with traditional financial markets suggests that it may find a bottom along with equity markets, particularly the S&P 500. 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. Trade wars have already been priced in to some extent, but prolonged economic strain could weigh on sentiment.

Despite fears over a disrupted Bitcoin bull market, the four-year cycle, along with the Bitcoin halving event, remain crucial for Bitcoin’s price action. The 2024 Bitcoin halving reduced the Bitcoin network’s block reward to 3.125 BTC per block. Bitcoin price is up over 31% since the last halving occurred on April 20, 2024, which was coined the “most bullish” setup for Bitcoin price, partly because of the growing institutional interest in the world’s first cryptocurrency.