Market Analysis: Bitcoin’s Steepest Decline Since FTX
Bitcoin (BTC) has recorded its sharpest three-day decline since the FTX collapse in 2022, plummeting 25% from January’s all-time high. This dramatic price action has left investors questioning whether to ‘buy the dip’ or avoid catching a falling knife in an increasingly volatile market.
The steep correction comes amid several market-shaking events, including the largest hack in crypto history at Bybit, which has significantly impacted investor sentiment. Adding to the downward pressure, a surge in memecoin trading has pulled substantial liquidity from the broader cryptocurrency market.
Technical Analysis and Market Context
Despite the alarming price action, historical data suggests this correction falls within normal parameters for bull market cycles, which typically see pullbacks of up to 35%. Bitcoin’s recent bounce off its 200-day moving average at $81,800 provides a potential technical support level.
Key market indicators:
- Price Drop: 25% from ATH
- Key Support: $81,800 (200-day MA)
- Short-term Holder Selling: Highest since August
- Market Structure: Similar to previous bull market corrections
Institutional Impact
BlackRock’s IBIT ETF has experienced record outflows, suggesting institutional investors may be taking profits or reducing exposure. However, positive developments in the mining sector offer a counterbalance, with Core Scientific securing a $1.2 billion expansion deal and MARA Holdings reporting strong earnings.
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Expert Perspectives
Market analysts suggest this correction could represent a healthy reset for the market. “Previous bull cycles have shown that corrections of this magnitude often precede stronger rallies,” notes crypto analyst Sarah Chen. “The high volume of short-term holder selling typically indicates a potential bottom formation.”
Looking Ahead
While the immediate price action has sparked concern, the underlying market fundamentals remain strong. The combination of institutional involvement, mining sector growth, and historical bull market patterns suggests this correction may present a buying opportunity for long-term investors.