Bitcoin is Still Super Bullish and Here is Why

• Bitcoin has pulled back more than 15% since hitting an all-time high one month ago, with some major altcoins nosediving 40%-50%
• “Few understand how normal corrections like these are in bull markets,” one observer noted
• Bitcoin has pulled back more than 15% since hitting an all-time high one month ago, with some major altcoins nosediving 40%-50%, but “few understand how normal corrections like these are in bull markets,” one observer noted

Bitcoin has pulled back more than 15% since hitting an all-time high one month ago, with some major altcoins nosediving 40%-50%, but “few understand how normal corrections like these are in bull markets,” one observer noted.

What’s Happening in the Crypto Market?

Bitcoin has fallen from its record high of around $69,000 in early November to just under $53,000 at the time of writing. Ether, the second-largest cryptocurrency, has dropped from over $4,800 to about $4,000 over the same period. Meanwhile, Solana, Polygon and Avalanche have crashed between 40% and 50% from their all-time peaks.

The sharp corrections have led to panic selling among newer entrants and excessive leverage being flushed out. However, some analysts view this as a healthy pullback that could lay the groundwork for the next leg up.

Reasons to Stay Bullish on Bitcoin

Despite the steep drop, here are some reasons why bitcoin could soon resume its uptrend:

• Strong On-Chain Metrics: Key on-chain indicators like bitcoin reserves on exchanges, active addresses and transaction volumes remain healthy, suggesting strong underlying demand.
• Institutional Adoption: Major institutions like pension funds, insurers and asset managers are increasingly allocating to bitcoin and crypto, bringing more mainstream legitimacy.
• Macroeconomic Backdrop: High inflation and expansionary monetary policies adopted by central banks in the wake of COVID-19 make scarce assets like bitcoin attractive.
• ETF Launch: The recent launch of the first U.S. bitcoin futures ETF could open the floodgates for greater participation in cryptocurrency markets.
• Technical Outlook: From a chart perspective, bitcoin appears to be undergoing a bull flag continuation pattern that could precede a breakout to new highs.

Corrections Are Normal in Bull Markets

Sharp drawdowns of 15%-20% have been par for the course in bitcoin’s previous bull market cycles. With so much hype and leverage in the system presently, a flush out of excesses is viewed by some as a prerequisite for restarting the bull run on a firmer footing.

As blockchain investment firm Pantera Capital noted, “This correction is textbook for the bitcoin bull market. We are right on schedule…This is how bitcoin bull markets work.”

Conclusion

In summary, the latest crypto plunge looks routine in the context of past bull cycles despite the outsized volatility. While further downside is possible in the short term, the long-term bullish case for bitcoin and crypto remains intact.