Bitcoin price had risen sharply since the beginning of the year, but most market participants were still very bullish. This was particularly reflected in the long/short ratio on options and leverage markets.
Bitcoin has recently reached a market cap of over a trillion US dollars for the first time. However, one should be careful. A few days ago, the Bitcoin price fell from over $58,000 to under $45,000 within 24 hours.
As a result, a wave of indignation, especially on social media, took place. In relative terms, Bitcoin has been strong since the beginning of the year. But many traders, especially intraday ones, apparently suffered heavy losses. Various data shows that more than $4 billion has been liquidated in Bitcoin longs.
New Bear Market or Just a Correction?
The question that many investors are now asking is whether this is just a normal correction or an initiation of a new bear market. In the financial world, there is a clear definition of the term ‘bear market’. It’s typically initiated by a -20% price drop from the last high and is often related to the overall financial market.
In the current case, the drop from over $58,000 to under $ 45,000 would actually be the start of a new bear market. However, historically this isn’t the first time for Bitcoin. There have already been such price developments. As a result, the BTC price rose sharply again.
In the last few weeks and months, the interest of institutional investors, in particular, has steadily increased. This seems to be a trend that will last in the long term, as investors want to protect themselves against the threat of a US dollar devaluation.
From our point of view, this is an appropriate correction with the following consolidation before we can make new highs. Such BTC pullbacks are perfectly normal and come as no surprise. How was mentioned before, the recent loss in US dollars was the highest that Bitcoin has ever suffered. Anyone who has long-term investments in Bitcoin shouldn’t worry.