Despite Bitcoin’s recent price drop, experts suggest this decline is a typical market correction. According to Charles Edwards, founder of Capriole Investments, a drop to $52K or even $45K is within the range of a normal 30-40% pullback in a bull market. Currently, Bitcoin is down 13% for the week, trading below $55K, which has erased significant Q1 gains following the US spot BTC ETF approval.
Edwards explains that a further drop to around $50K should not be seen as the end of the bull run but rather a natural market adjustment. He emphasizes that, unlike traditional stocks where a 5-10% drop signals a downtrend, Bitcoin’s volatility means larger fluctuations are common.
Market sentiment has been affected by sell-offs linked to Mt. Gox and German Bitcoin. However, some see these sell-offs as clearing overhanging supply, potentially setting the stage for growth in Q3 and Q4 2024. Recent delays in Mt. Gox repayments might provide temporary relief to the market.
On-chain metrics suggest Bitcoin still has growth potential. Historical data indicates a market peak might not occur until late 2025. Key indicators like the Market Value to Realized Value (MVRV) ratio and Puell Multiple, which assesses miner profitability, are not yet at extreme levels, suggesting more room for an upward trend.
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