Are 40% Bitcoin Bull Run Corrections Over?

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  • 30-40% Bitcoin bull run corrections have been standard practice in the past
  • We haven’t seen any in this Bitcoin bull market which began in March last year
  • We suggest three reasons why 30-40% Bitcoin bull run corrections could be a thing of the past

30-40% corrections have historically been part of a Bitcoin bull run, but we haven’t yet seen any since Bitcoin bottomed out in March 2020. This might not be coincidence – this bull run is powered by a very different type of buyer, although with Bitcoin hitting $38,400 this week, talk of such a correction has grown. However, there are several very good reasons as to why 30-40% Bitcoin bull run corrections might be a thing of the past.

Bitcoin Demand is Higher Than Ever Before

Bitcoin demand skyrocketed in 2020 as the use case of a decentralized form of currency became clear to a much wider audience. This included institutions, who have been buying up BTC by the thousand, and continue to do so. This increased demand means that dips are being bought up much quicker than in previous bull runs, as buyers have more money at their disposal and are desperate to get in at a reduced price.

We can see evidence of this as Bitcoin has climbed to unprecedented levels in the past weeks, with each dip resulting in a long candle wick, showing that any weakness was immediately pounced on and the price was sent back up very quickly.

Price is Too High for 40% Corrections

At $20,000 and below the chance of a 40% correction was there, given how quickly Bitcoin had moved through the gears to get there. However, with Bitcoin now having reached $38,400 and even 16% dips being bought up in hours to days, the chances of Bitcoin being allowed to fall to the $20,000 region before huge buyers stepping in are almost unthinkable, unless we experience another black swan event like we had in March.

There is Less Money on Exchanges

The amount of bitcoin held on exchanges has been in a relentless downtrend this year. Exchanges now hold the same amount of bitcoin as they did in November 2018, with more and more being taken off exchanges and into wallets. This presents a lack of ‘ammunition’ for whales to use to crash the price at a time of their choosing, as they so often did in 2017. Combine this with a desire for institutions to snap up bitcoin at a reduced price and you have a recipe for small dips quickly bought up.

Never Say Never in a Bitcoin Bull Run

Of course, we can never rule out a 30-40% drop entirely – this is Bitcoin after all – but the three factors above would suggest that volatility may finally be coming under control, and that, with very different buyers now in town, we may finally be able to wave goodbye to the eye watering Bitcoin bull run corrections of the past.