By cryptoadmin Bitcoin recovered some of its losses today after yesterday's sharp decline, but according to analysts, risks in the cryptocurrency market remain high.
The largest cryptocurrency gained 7.4% on the day to trade at $91,765. Bitcoin, however, had retreated nearly 20% from its November peak yesterday, testing below the critical $85,000 level.
The sharp pullback seen over the past month suggests that the bull rally could be giving way to a bear trend, according to many analysts. Kyle Rodda, senior market analyst at Capital.com, said that, based on past cycles, Bitcoin would need to see a much deeper decline for a true “crypto winter” to occur.
“Crypto winters last much longer than a few weeks. If the current action is the beginning of a crypto winter, this could be just the early stages. Bitcoin could fall much further,” Rodda said, recalling that BTC's value eroded by 75-80% between 2018 and 2022.
However, some experts believe the current decline is more of a “mid-cycle correction” than a structural bear market. Ryan Li, CEO of Surf, a company that tracks the digital asset market using artificial intelligence, noted that Bitcoin's current price action closely resembles the mid-cycle pullbacks of the 2013, 2017, and 2021 cycles.
“The depth of this pullback, the subsequent recovery, and the on-chain structures suggest that this is a period of consolidation rather than the beginning of a prolonged decline,” Li said. He also argued that Bitcoin’s classic four-year cycle could be extended due to the growing interest from institutional investors: “Market cycles are shifting from four years to five- to six-year expansionary periods.”
Despite the price pressure, Bitcoin's fundamentals remain strong, according to some experts. Sam Callahan, director of Bitcoin strategy and research at OranjeBTC, said the network is experiencing one of the most robust periods in its history.
“Despite this decline, Bitcoin’s fundamentals are strengthening: institutional and government adoption is increasing, regulatory frameworks are becoming clearer, and the network is reaching its strongest state to date,” Callahan said. He added that the divergence between price and fundamentals has historically presented a positive opportunity for long-term investors.
*This is not investment advice.