Key Takeaways
- A 50% correction is standard volatility for Bitcoin.
- A recent 20% surge triggered record short liquidations.
- U.S. federal debt reinforces Bitcoin’s role as a fixed-supply inflation hedge.
Over the past several months, Bitcoin has declined significantly amid macro pressures, quantum hacking fears, and speculative investors have shifting capital toward artificial intelligence stocks. After a strong rally through most of 2025, Bitcoin peaked at $126k before correcting more than 50% to a June low of $59k.
Image Source: TradingView
Although a 50% correction would be considered catastrophic for equity markets, it is quite the norm for Bitcoin. In fact, over the past decade, Bitcoin has dropped more than 50% from its all-time highs on five occasions, including the 2017-2018 bear market, the March 2020 COVID crash, the May-July 2021 correction, and the 2021-2022 FTX bear market.
Image Source: GlassNode
Despite many deep Bitcoin drawdowns, Bitcoin has recovered to make fresh all-time highs after every drawdown in its history. Below are 5 reasons this time won’t be different:
Bitcoin Technicals:
Bitcoin has several bullish technical signals occurring currently. First, Bitcoin retreated to its long-term 200-week moving average for the first time since 2023. The 200-week MA has largely contained the Bitcoin bull market since its inception and has been one of the best long-term buy zones.
Image Source: TradingView
Meanwhile, Bitcoin just spent 6+ months below its 200-day moving average for the 3rd time in history. Getting a chance to buy Bitcoin at these levels is extremely rare in its history. The previous two instances it spent this much time below the 200-day, Bitcoin was up 39% and 115% a year later.
Bitcoin Momentum:
Analyst Caleb Franzen (@CalebFranzen) points out that last week’s Bitcoin +20% move may be a very bullish signal. Since 2018, Bitcoin’s average 6-month return is +51.3% after a 20% or more weekly move.
Image Source: Caleb Franzen
Bitcoin Shorts are Caught Offsides:
Last week’s crypto move triggered $2.73 billion in short liquidations, the largest short-liquidation event on record. That said, many traders remain offside on their shorts and will likely be forced to cover in the coming weeks.
Inflation Protection: For the first time, the U.S. federal deficit has reached $40 trillion. The U.S. government is now spending $3.8 billion on interest per day. By 2028, estimates suggest that number will swell to $5 billion. In other words, the government will be forced to print more money over the next few years and inflate the dollar. Because Bitcoin has a fixed supply, I see it as digital gold and a way to fight inflation.
Nation State Catalyst: Last Wednesday, President Trump announced that the U.S. plans to buy “sizable” amounts of Bitcoin.
Note: Investors who want to purchase Bitcoin but don’t have a Coinbase ((COIN – Free Report) ) or crypto account can buy a low-cost ETF like the iShares Bitcoin ETF ((IBIT – Free Report) ).
Bottom Line
Bitcoin’s long-term bullish thesis remains intact. Backed by historically reliable technical floors, record-setting liquidations, and mounting government debt, the current correction fits the pattern of previous cyclical bottoms
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