By Chris Hollingworth 
Bitcoin (BTC) has recently experienced a significant correction, marking the second-largest pullback of the current bull market, according to analysts at Bitfinex, a prominent cryptocurrency exchange. The correction saw Bitcoin drop from its all-time high of $109,590 reached on January 20 to a low of $77,041 between March 9 and March 15, representing a retracement of approximately 30%. This downward movement was primarily driven by selling pressure from short-term holders, as defined by Bitfinex as investors who have purchased Bitcoin within the last seven to 30 days.
Short-term holders have faced unrealized losses and are considered more susceptible to market capitulation, as highlighted by Bitfinex. Additionally, the exchange noted significant outflows from Bitcoin ETFs totaling around $920 million during the same week, indicating that institutional investors have not yet re-entered the market in force to counterbalance the selling pressure.
As Bitcoin currently trades around $84,357, it has seen a modest rebound of 9.5% from its recent low. Bitfinex emphasizes that a crucial factor going forward will be the resurgence of institutional demand at these lower price levels, potentially leading to the absorption of supply and stabilization of prices. The analysts at Bitfinex mentioned to Cointelegraph that historically, a 30% drawdown often precedes a market bottom before a potential uptrend, suggesting a possible strong recovery if Bitcoin consolidates around its current levels.
In a broader context, weekly outflows from cryptocurrency exchange-traded products (ETPs) have extended for five consecutive weeks, totaling $6.4 billion as of March 14. Notably, Bitcoin ETPs have borne the brunt of these outflows, experiencing losses amounting to $5.4 billion. The prevailing macroeconomic environment may be contributing to market uncertainty, with a decline in US consumer confidence, concerns over inflation, and economic instability. Furthermore, ongoing discussions about trade wars have sparked doubts about Bitcoin’s status as a safe-haven asset, creating a sense of unease among miners and potentially endangering the current bull market.
Despite recent announcements from the White House regarding a US Bitcoin strategic reserve and digital asset stockpile, the market remains cautious. With the complex interplay of institutional flows, macroeconomic factors, and market sentiment, the future trajectory of Bitcoin remains uncertain, with potential for both recovery and further downside risks.
Reference:
– Glassnode/Bitfinex
– CoinShares
Source: X Hall of Flame, Benjamin Cowen: Bitcoin dominance will fall in 2025
