Key Points
- Bitcoin’s price drawdowns have not exceeded 20% in the current cycle, indicating a lack of a traditional bull market correction.
- The introduction of US spot Bitcoin ETFs has significantly altered Bitcoin market dynamics.
Bitcoin sellers have not been able to trigger a typical correction in the bull market during this cycle, according to recent analysis.
The pseudonymous lead on-chain analyst at Glassnode, known as Checkmate, pointed out that price drawdowns for Bitcoin (BTC) have barely reached 20%.
Limited Pullback Despite All-Time Highs
While Bitcoin has seen a retracement from its all-time highs near $74,000, the percentage-based corrections have been relatively minor.
This becomes even more evident when compared to previous bull markets. Checkmate shared data indicating that despite significant profit-taking and reactionary selling at peak levels, the market has only seen a maximum 20% downturn once.
Subsequent drawdowns did not surpass 15.8%. Checkmate stated that the market is absorbing massive sell-side days without managing a 20% pullback.
Contrast with Previous Cycles
For comparison, the bull market cycle from 2019 to the end of 2021 experienced two pullbacks exceeding 50%, with one exceptional case in March 2020 due to COVID-19, reaching 61.4%.
Checkmate acknowledged that historical data suggests a significant pullback is likely. However, the surprising factor is that it hasn’t happened yet.
The dynamics of the Bitcoin market have undergone substantial changes in 2024. Among the significant shifts is the introduction of US spot Bitcoin exchange-traded funds (ETFs).
Since their launch in January, these ETFs have acquired over 500,000 BTC. This buy-side support, along with factors like multi-year lows in BTC balances on exchanges, is fuelling bullish sentiment for a return to price discovery.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, warned about getting too excited over the ETFs’ record-breaking performance. He noted that while the inflows have been impressive, without the ETFs, Bitcoin’s price would likely be around $30,000.
Balchunas further added that ETF products would experience days of net withdrawals, which is standard investor behavior.
