Bitcoin’s Market Correction Sees Price Fall to $45K
Bitcoin (BTC) witnessed a 13% decrease in its price over the past week, dipping below $55K. The recent slump wiped out a majority of the gains it had accrued in the first quarter following the approval of a US spot BTC ETF.
Investors are growing concerned as this downturn raises doubts about the continuation of the bullish trend in the market.
Despite the anxiety among traders, Charles Edwards, the founder of the crypto hedge fund Capriole Investments, reassured that the decline was within the realm of ‘normal’ market behavior.
Edwards noted, “A pullback to $52K or even $45K is a typical 30-40% correction in a bullish market.”
From its peak of $73.7K in March, Bitcoin has shed nearly $20K, hitting lows of $53.4K, marking a 26% drop.
If the price were to retreat to the consolidation zone observed in February, it would represent a 30% retracement.
In traditional stock markets, a drop of 5-10% is considered a pullback, signaling a potential downtrend. However, this rule might not be applicable to Bitcoin, according to Edwards. In this context, the $50K level holds significance as a critical target to monitor.
Is the Bullish Momentum Fizzling Out as Bitcoin Approaches $50K?
Market analysts have associated the recent negative market sentiment with the Mt. Gox controversy and large-scale Bitcoin sell-offs in Germany.
Some observers view the sell-offs as a positive development, suggesting that they could help eliminate the lingering supply overhang and pave the way for a stronger uptrend by Q3 2024.
“By late Q3 or Q4, seasonal factors, election cycles, and enhanced liquidity could help alleviate the supply overhang issues that have plagued the market for years,” analysts explained.
However, it seems that the distribution of Mt. Gox funds may face delays. A recent update on July 5 hinted at potential delays in repayments to other creditors.
The troubled Japanese exchange still holds 141.6K BTC, valued at approximately $7.6 billion at current rates, awaiting liquidation. On July 5, it facilitated a transfer of $2.7 billion, sending $148 million worth of BTC to Bitbank.
Will a postponement in Mt. Gox’s repayments bring relief to the market? Only time will tell.
Despite the prevailing negative sentiment, Bitcoin’s trajectory might still have room for growth. Analysis of historical price data suggests that a market peak could materialize around late 2025.
Furthermore, key indicators signaling Bitcoin’s cycle top have not yet reached overheated levels. Metrics like MVRV (Market Value to Realized Value) and Puell Multiple, which assess miners’ profitability, show no signs of extreme values, implying that Bitcoin could still witness further upside potential.