Bitcoin (BTC) faced renewed selling pressure on February 5, falling to $97,882 and dashing hopes of an immediate recovery. The crypto asset continues to struggle after a volatile weekly open, where daily price swings ranged nearly $11,000 between highs and lows.
BTC Closes Below $100K as Consolidation Looms
For the second time since January 15, Bitcoin’s daily chart closed below the $100,000 mark, signaling a potential period of consolidation in the coming days. The recent liquidation event has left investors cautious, with many reassessing their positions and questioning whether further downside is imminent.
Despite the current market uncertainty, Bitcoin remains only 11% below its all-time high of $109,026. While this may seem significant, it’s relatively minor for such a volatile asset, especially considering Bitcoin has surged 131% over the past year.
Bitcoin Drawdowns: How Does This Compare to Previous Cycles?
Historically, Bitcoin’s drawdowns have decreased with each bull cycle:
- 2016-2017 Cycle: Average correction of -38%
- 2020-2021 Bull Run: Average correction of -23.25%
In the current 2024-2025 cycle, Bitcoin’s maximum drawdown stands at 26%, occurring over six months from March to August 2024. The average drawdown for 2024-2025 has been a modest 12%, with 2025 specifically showing an even smaller average of 8.9%.
Given these figures, recent corrections since August 2024 are relatively minor and do not qualify as market crashes. Most declines have been shallower than the historical averages, suggesting that the current downturn is within normal market behavior.
Will Bitcoin Drop to $90,000?
Bitcoin’s inability to close above $105,000 has led to bearish market sentiment, with its price structure starting to resemble the consolidation phase from March 2024. During that period, BTC formed lower highs and lower lows, with prices sliding from $73,881 to a low of $49,000, though the lowest daily close was around $54,839.
In the worst-case scenario, Bitcoin could drop to $81,500, representing a 26% decline from its all-time high—matching the maximum drawdown for this cycle. However, a more immediate correction to $90,000, which equates to a 14% drop, seems plausible. This level would represent about 60% of the largest drawdown experienced in the current cycle.
Considering the bearish shift in market structure, there’s a strong chance that Bitcoin will re-test the $90,000 level in the coming weeks.
