According to Blockworks, Bitcoin would be in a bear market if traditional financial definitions were applied, but these definitions don't fit well with the cryptocurrency world. A bear market in legacy finance is typically defined as a broad index of stocks, such as the S&P 500, dropping 20% or more from recent highs. Bitcoin has experienced a similar drop since spot bitcoin ETFs went live earlier this month, with its price briefly hitting $49,000 before falling to $38,500, a 21% drop. However, such drops are common in bitcoin bull markets, and this would be the fourth pullback of this size in the current cycle.
Price discovery in the cryptocurrency market is rarely a straight line, with similar retracements occurring in March, June, and August 2023. Despite these fluctuations, Bitcoin's price has still doubled its lowest point from last year. There have been six bull cycles in Bitcoin's history, with the first proper bull cycle between February 2011 and April 2013 experiencing 19 corrections of 20% or more. The length of time between 20% corrections is increasing over time, with the current cycle seeing a correction every 102 days on average, 40% more than during the previous two bull markets. This trend is also illustrated by Bitcoin's historic volatility, which is gradually decreasing over time. However, this kind of analysis only works with the benefit of hindsight, and it is impossible to predict whether this month's pullback was the last in the current cycle.