Bitcoin price falls by 25%: Why analysts see this as a healthy correction

While Bitcoin (BTC) is trading more than 24% below its January all-time high, the general expectation among analysts remains that the real peak of this cycle is yet to come. According to experts, the current decline is a logical correction within a long-term uptrend.

Correction fits historical pattern

Since Bitcoin reached a record price of $109,000 in January, the currency has declined sharply. Currently, the Bitcoin price is fluctuating around $83,285. Nevertheless, analysts say there is no reason to panic.

Ben Simpson, CEO of Collective Shift, considers the current decline a normal phase of the cycle. “We’ve only seen three or four corrections of more than 25% this cycle, compared to twelve in the previous cycle.” “That’s part of it.” He points to the market being overheated and a necessary correction to form a new base.

Nick Forster, co-founder of Derive, also sees no cause for concern. “Historically, Bitcoin undergoes such corrections during longer rallies.” “This time is no different.”

A key difference from previous bull markets is the influence of macroeconomic factors. Since the election of Donald Trump in November, Bitcoin has risen sharply, partly due to expectations that his policies will be beneficial to the markets.

What is the next catalyst?

According to Simpson, the next upward impulse will likely depend on interest rate cuts by the Federal Reserve (FED). “The market is waiting for a new narrative.” “If the Fed ends its tightening later this year and liquidity increases, this could be the catalyst for a renewed recovery.”

However, not everyone is convinced. Charles Edwards of Capriole Investments estimates the probability that the bull market is over at 50%. “Based on on-chain data, things currently look positive, but that could change quickly.” “If the Fed stops its balance sheet reduction later this year and dollar liquidity increases, there is still plenty of upside potential.”

Although opinions vary, most analysts seem to agree that the current correction is part of the normal course of a bull market. Whether and when Bitcoin makes its next big jump depends largely on the broader economic situation.