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Here’s Why Bitcoin Crash to $80K is a Normal Correction Rather Than the Start of a Major Downtrend
Data confirms that the latest Bitcoin crash is likely the result of a natural correction rather than the start of a major downtrend. Bitcoin has again dropped below $80,000 for the second time this year, triggering panic among investors. As fear spreads, many question whether this decline signals the end of Bitcoin's bull run or …
Data confirms that the latest Bitcoin crash is likely the result of a natural correction rather than the start of a major downtrend.
Bitcoin has again dropped below $80,000 for the second time this year, triggering panic among investors. As fear spreads, many question whether this decline signals the end of Bitcoin’s bull run or if it is merely a natural correction within an ongoing uptrend.
Decline in Peak Losses Shows Bitcoin in a Natural Correction
In a recent analysis, Glassnode revealed that although Bitcoin revisited the low $80K range, the extent of realized losses remains significantly lower compared to previous corrections.
Although $BTC revisited the low $80k range, loss realization at peak remained significantly lower than during the corrections from late Feb – early March.
Aggregated peak losses: 🔻 Feb 25: $933M 🔻 Feb 26: $897M 🔻 Feb 28: $933M 🔻 Mar 4: $592M 🔻 Mar 10: $377M pic.twitter.com/ryamAflG2z
For instance, during the late February and early March downturns, aggregated peak losses ranged from $592 million to as high as $933 million. However, the latest pullback saw a peak loss of just $377 million, indicating a decline in panic selling.
A major change in this correction is that losses are now spreading to investors who have held Bitcoin for 3 to 6 months. In late February, this cohort only realized losses of about $2 million, but this number has now surged to $9.5 million.
Meanwhile, holders from the 6 to 12-month range are showing resilience, with negligible realized losses. Instead of panic selling, they are actively distributing at a profit. On March 10, this group took $26.4 million in profits, accounting for 44.4% of all profits across different investor categories, excluding short-term traders who held for less than 24 hours.
Essentially, while short-term price action could remain choppy, especially if $80K doesn’t hold, the lower realized losses and continued profit-taking from older cohorts (instead of full-scale capitulation) suggest that this is likely a normal market correction rather than the start of a major downtrend.
Axel Adler Jr., a CryptoQuant analyst, confirmed further. He highlighted that long-term holders had already distributed 1.715 million BTC when prices surged past $60,000.
30-Day Net Position Change of Long-Term Bitcoin Holders (LTH)
LTH distributed 1.715M BTC from the $60K level.
Currently, the intense distribution phase has ended, and the metric has nearly returned to neutral levels, indicating a halt in large-scale selling. pic.twitter.com/H19m4xODNu
However, this phase of intense selling has now cooled off, with the net position change of long-term holders returning to neutral. This suggests that large-scale exits have significantly declined, which could reduce further downside pressure.
Possible Further Decline Before Recovery
Meanwhile, market veteran Michaël van de Poppe stressed that Bitcoin is seeing a lack of a decisive breakthrough in recent price action, which explains the continued downward movement. He predicted that the market would likely retest previous lows or take liquidity in that range.
Bitcoin 4h Chart Michael van de Poppe
He outlined two possible scenarios: Bitcoin could either find support and establish a higher low, or it could decline further to the $76,000 to $78,000 zone, forming a double-bottom pattern before bouncing higher.
Another analyst, CrediBULL, noted that Bitcoin is currently forming a base before making a full reversal. He expects price action to remain volatile in the short term, with Bitcoin chopping between a local supply zone of $94,000 to $99,000 and a higher timeframe demand zone just under $74,000.
Bitcoin 4h Chart | CrediBULL
After recently rejecting from the local supply area, the market is now building a foundation for the next move. He is closely monitoring reactions at the extreme ends of the current range to gauge Bitcoin’s next direction.
Further, Ted, a market veteran, compared Bitcoin’s performance with traditional assets such as the S&P 500 and gold. He observed that while all three assets experienced a strong rally in Q4 of the previous year, their trajectories have since diverged.
Gold appears to be in an up-only phase, whereas both Bitcoin and the S&P 500 have been facing corrections. Based on the historical correlation between Bitcoin and the stock market, he suggested that Bitcoin could potentially decline to the $72,000 to $74,000 range before establishing a solid bottom.
Recall that as Bitcoin traded around $88K last month, Standard Chartered’s Geoff Kendrick warned that further declines before a recovery could occur. At press time, BTC trades for $80,053, down 4.28% over the past 24 hours.
Gabrielle Desailly a former investment strategist, Gabrielle covers the intersection of cryptocurrency and global finance. She specializes in regulatory developments, market sentiment, and how digital assets reshape economies.
