Bitcoin has plummeted 22% from its January 2025 record high of $109,241 to $85,208, wiping $900 billion from the market. The correction followed Trump's inauguration rally and coincided with hawkish Fed policy. Technical indicators show Bitcoin breaking below its 50-day moving average and hitting oversold conditions. Despite the sharp decline, Bitcoin remains 100% higher than March 2024 levels. The upcoming halvingA process that reduces the reward for mining new blocks, oft event may provide context for this market adjustment.
The cryptocurrencyA digital or virtual currency that uses cryptography for sec market's flagship asset has experienced a notable correction, with Bitcoin tumbling 22% from its all-time high of $109,241 reached on January 20, 2025, to a current value of $85,208. This decline marks the largest correction since Bitcoin surpassed the $100,000 milestone, resulting in a $900 billion reduction in total market capitalization over approximately eight weeks.
Despite this notable pullback, Bitcoin remains up 100% from its March 2024 levels, reflecting the asset's volatility amid its overall upward trajectory.
The record high coincided with Donald Trump's presidential inauguration, when investor sentiment peaked on expectations of crypto-friendly policies. The sudden downturn also followed the Federal Reserve's hawkish stance on monetary policy, contributing to investor uncertainty. The subsequent correction has been attributed to several factors, including profit-taking after rapid price appreciation, regulatory uncertainty, macroeconomic headwinds, and disappointment regarding the implementation of Strategic Bitcoin Reserve plans.
The price movement has also demonstrated correlation with broader financial market volatility. This correlation aligns with traditional U.S. stock market trends, suggesting Bitcoin is increasingly integrated with mainstream financial assets.
Market sentiment indicators reveal a dramatic shift in investor psychology. The Fear & Greed Index has moved from "Extreme Greed" to "Extreme Fear," while Google search interest for "Bitcoin crash" has spiked notably.
Social media sentiment has turned bearish, institutional inflows have decelerated, and futures markets show increased short positions, all signaling a temporary reversal in market confidence.
Technical analysts note that Bitcoin broke below its 50-day moving average while reaching oversold conditions according to the Relative Strength Index. The upcoming Bitcoin halving event is expected to reduce rewards to 3.125 BTC per blockA unit of data containing transactions that are added to the and may influence price stability in the coming months. The $80,000 level is now viewed as critical psychological support, while the 200-day moving average has so far held as support.
Traders are closely monitoring Fibonacci retracement levels to identify potential reversal zones.
Compared to previous market corrections, the current drawdown appears less severe than the 85% decline during the 2018 crypto winter and shorter in duration than the 2021-2022 bear marketA market condition characterized by declining prices..
The current correction has established a higher low relative to the previous cycle's peak, suggesting structural market strength despite short-term weakness.
Analysts remain divided on whether this correction represents a temporary "shakeout" or the beginning of a more prolonged bear phase.
Bullish factors include the 2024 halving event's supply reduction and continued ETF inflows expected to resume after initial profit-taking subsides.
While $100,000 remains a key resistance level to reclaim, long-term price projections continue to maintain a bullish outlook despite the current correction.
