Key facts: “Investors should be prepared for declines of more than 10%,” says NYDIG. The decline that BTC had days ago is in line with its historical behavior. In the last five days, bitcoin (BTC) went from trading at $60,700 to $69,000 (USD). In this way, the market appears to be trying to approach the all-time high price (ATH) of USD 73,700 that it reached almost two weeks ago. This behavior raises the question of whether it will continue to rise or have other relapses. To bring clarity on this issue, NYDIG, a company that offers infrastructure and financial services with BTC, shared its vision. “Drops of more than 10% are regular occurrences, even during bitcoin rallies from a cyclical low to a peak,” he introduced. The company added that bull markets are never in a straight line, but are interrupted by certain setbacks. He indicated that in the three previous cycles that brought BTC to a new ATH (in 2013, 2017 and 2021) he recorded average drops of 24-36%. This can be seen in the following table.
Bitcoin price drops during its cycle low to high. Source: NDYG. Meanwhile, in bitcoin's current cycle to the new ATH it marked almost two weeks ago, experienced average declines of 17.5%. This percentage is also what declined from that milestone to the USD 60,000 area, from where it rebounded five days ago, as seen below.
Bitcoin price in the last five days. Source: TradingView. In this sense, NYDIG clarified that the current pullback from the ATH “is completely in line with previous bitcoin price cycles.” In fact, not only that, but he also distinguished that it is not as deep as it has been on other occasions. Therefore, he maintained that even if it fell further, it would remain within its usual bull market behavior. Specifies that does not mean that the current upward cycle has ended, unless you don't get your ATH back. Understanding this, he believes that “investors should be prepared for regular declines of more than 10%.” He explains that they have to be ready “for the inevitability of such developments, since, as in all other financial markets, progress is not always in a straight line.”
The Fed made a positive move for bitcoin, according to NYDIG
NYDIG contextualized that the decline that BTC experienced days ago occurred in part due to the performance of bitcoin exchange-traded funds (ETFs) in the United States. As BitcoinDynamic shared, these recorded their highest weekly output after two months of sustained inflows that boosted the price. However, the company distinguished a positive light. Precisely, he mentioned that the Federal Reserve (Fed) was moderate, leaving interest rates unchanged, but keeping open the possibility of future cuts. That “helped most assets rise higher this week,” he said. Faced with such a move by the Fed, which envisions a more prosperous macroeconomic situation, ETF outflows slowed and demand grew. That is why, consequently, the price of bitcoin has currently recovered from USD 60,000. An analysis shared by CryptoQuant indicates that, in this scenario, an increase in the purchasing power of institutional investors and whales is to be expected before mid-year. He warns that this will motivate bitcoin purchases, boosting its price.