Many investors are concerned about the current market downturn, but analysts at the cryptocurrency exchange Bitfinex believe that the historical bull market cycle of Bitcoin remains intact. The recent decline may just be a temporary “shakeout” before the next upward movement.
Bitcoin reached a historic high of over $109,000 on January 20, the day of U.S. President Donald Trump’s inauguration, before subsequently dropping about 30% over the next 50 days, briefly falling below the $77,000 mark. During this period, market sentiment shifted from “extreme greed” to “extreme fear.”
However, the current situation may simply be a “shakeout,” referring to a sharp price drop caused by a large number of investors liquidating their positions, followed by a potential rapid rebound. Bitfinex analysts stated in an interview with Cointelegraph: “Several key technical indicators have turned bearish, leading the market to speculate that this bull market cycle may be coming to an early end.”
Nevertheless, analysts believe that Bitcoin’s four-year cycle remains a significant factor that “historically influences price movements.” They added:
Moreover, analysts also pointed out that the launch of Bitcoin spot exchange-traded funds (ETFs) in the U.S., along with increasing institutional investment in cryptocurrencies, may render traditional cycle patterns obsolete.
Correlation with Traditional Financial Markets
Bitfinex analysts further stated that due to its correlation with traditional financial markets, Bitcoin may find a price bottom alongside the stock market, particularly the S&P 500 index. Analysts expressed:
They added that although the trade war has been somewhat absorbed by the market, ongoing economic pressures could undermine market confidence.
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