28% Correction Registered by Bitcoin This Cycle, Is Historical Pattern Still Intact?

Analysts at the onchain data analytics platform CryptoQuant addressed the recent Bitcoin (BTC) price correction. According to them, BTC has not registered a correction exceeding 28% during the current bull market.

As such, they believe the current Bitcoin movement will continue without breaking historical patterns.

The Bitcoin Price Correction Outlook

According to CryptoQuant analyst Darkfost, BTC has retraced by roughly 12% since the last all-time high (ATH), at around $ 123,000.

The analyst considers this a normal correction within a bull market. He went on to explain that since the first ATH in March 2024, the largest drawdown reached 28%, meaning the current 12% drop is relatively mild.

The most severe pullbacks on average have typically been between 20% and 25%. In past bull markets, corrections were often deeper, ranging from 35% to 40% before Bitcoin resumed its uptrend.

Thus, the current cycle’s largest correction of 28% is smaller than historical norms. Darkfost claims the current move is therefore not unusual and could continue without breaking the historical pattern.

The analyst added that the current cycle correction suggests that Bitcoin is still in a relatively healthy bull market.

Darkfost views correction as healthy because it resets excessive leverage in derivatives and cools down overheated sentiment. Corrections also provide new entry opportunities for long-term investors.

Web3 growth manager Cas Abbe has also highlighted that the market is still progressing. Abbe claims the next major price increase may not have started yet. He framed the correction as a potential shakeout rather than a signal of a market top.

Abbe also referenced the CryptoQuant chart to highlight that the 28% correction is mild compared to past cycles.

Bitcoin Fear and Greed Index Neutral Sentiment

Meanwhile, the Bitcoin Fear and Greed Index is at 49, showing neutrality.

The Fear and Greed Index is a sentiment indicator for Bitcoin that measures investor emotions. The metric measures whether the market is overly optimistic or pessimistic. It ranges from 0 to 100.

A neutral BTC index indicates balanced market sentiment, meaning the market is not overly fearful or greedy.

With BTC currently at $110,242, the market is in a state of equilibrium, with no extreme emotional bias driving price action.

This aligns with the statement from Darkfost about the current 12% correction being a normal pullback. In a bull market, a neutral sentiment often accompanies healthy consolidations.

Moreover, the neutral sentiment suggests the correction has not triggered widespread panic. It also reduces the likelihood of sharp, emotion-driven price swings in the immediate term.

However, the slight lean of the Fear and Greed Index toward fear suggests some caution among investors.

BTC Price Outlook and Expectations

According to CoinMarketCap data, the value of BTC has increased slightly by 0.58% over the past 24 hours. BTC climbed to as high as $110,636 earlier today before dropping to the current levels.

Market activity for BTC has also improved, with the trading volume surging moderately by 10% to $63 billion.

Market analyst Merlijn the Trader on X earlier highlighted that the BTC chart is screaming bullish divergence.

The analyst noted that the BTC Relative Strength Index (RSI) recorded higher lows, suggesting that the selling intensity is decreasing. Thus, Merlijn the Trader is optimistic about a BTC price breakout soon.

Recent inflows into the spot BTC exchange-traded funds (ETFs) have also sparked expectations about an imminent rally for the leading coin.

Data provided by Farside Investors showed the BTC ETFs have four consecutive days of inflows, beginning on August 25.

However, a mysterious BTC whale has continued to dump the leading coin for Ethereum (ETH), raising bearish sentiments.