Bitcoin Falls, But Analyst Sees No Bear Market Yet

Bitcoin dropped below $95,000 multiple times on Friday, marking a 7.5% loss for the week. Despite the downturn, one analyst told Decrypt that the sell-off appears to be a mid-cycle correction rather than the start of a bear market, as losses haven’t reached capitulation levels.

Volatility seems to stem from panicked short-term holders. CryptoQuant analyst CrazzyBlockk explained that Bitcoin’s market is heavily influenced by newer investors. When short-term holders experience 20% to 40% losses, it triggers panic selling, traditionally signaling the beginning of a full-scale capitulation phase. However, current losses haven’t reached that point.

If new investors can regain some profits, the dip could be a temporary correction. The analyst emphasized that the market’s current losses are not indicative of a broader macroeconomic bear market.

Shifting expectations surrounding the Federal Reserve’s December meeting are also contributing to the market uncertainty. Traders now see only a 56.4% chance of rates remaining unchanged, compared to a 94% chance of a rate cut just a month ago.

Bitcoin was trading at $95,390 as of Friday, down 2.8% in the last day and 7.5% for the week. Liquidations have surpassed $1 billion after Bitcoin dipped below $100,000 for the third time this month.

Sentiment around the Federal Reserve’s December meeting is shifting. Traders have reduced the probability of a rate cut, influencing Bitcoin and other risky assets.

Wintermute analysts noted that the cryptocurrency market has been disproportionately affected compared to equity proxies like the Nasdaq 100. Pepperstone Research Strategist Dilin Wu advises caution, highlighting the need for improved sentiment, liquidity, and reduced volatility for a potential challenge of new highs. She pointed to the ongoing four-year cycle but cautioned against relying solely on cyclical patterns.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.