The Nightmare of Bitcoin's '50% Crash'... "How Long Will the Downtrend Last?"

[Financial News] Just a month ago, Bitcoin (BTC) surpassed $126,000, but has since fallen by more than 20% within the span of a month. In terms of market capitalization, approximately $600 billion (about 877 trillion KRW) has evaporated. Analysts attribute this decline to a combination of long-term holders taking profits, concerns over the halving cycle, and ongoing macroeconomic uncertainty.
On the 16th (local time in the US), the price of BTC dropped to $93,714. This marks a significant decline from its October 6 peak of $126,251. However, on the 17th in Asian markets, BTC rebounded to the $95,000 level, partially recovering from its losses.
Despite a favorable environment, including the inclusion of BTC in mainstream portfolios via Exchange-Traded Fund (ETF) products and support from the family of former US President Donald Trump, capital flows have stagnated. Notably, so-called 'whales'—long-term investors holding more than 1,000 BTC—have reportedly liquidated a significant portion of their holdings.
Shares of BTC investment companies such as Strategy Inc (formerly MicroStrategy) have also declined, approaching the value of their BTC holdings. This suggests that the market is no longer assigning a premium to BTC.

Jake Kennis, an analyst at cryptocurrency data firm Nansen, explained, "This sell-off is the result of a combination of hedge funds taking profits, institutional capital outflows, macroeconomic uncertainty, and the liquidation of leveraged long positions."
Experts in the digital asset industry point to the 'halving cycle' as a key factor behind the recent downturn. The halving is an event that occurs roughly every four years, reducing the supply of BTC by half. Historically, speculative booms have followed the halving, with sharp declines occurring one to one and a half years later.
In fact, during the 2017 halving, BTC surged by more than 13,000%, drawing significant attention. However, the following year, it plummeted by 75%, illustrating the cyclical nature of booms and busts.
According to foreign media reports, in previous cycles, BTC miners tended to sell off their holdings intensively during the year-long price rally that followed the halving.
In this cycle as well, after the April 2024 halving, BTC reached its peak in October of this year, one and a half years later. However, some foreign outlets noted that it remains uncertain whether the historical scenario will repeat, given that the current market is dominated by buyers with ample capital.
Matthew Hougan, Chief Investment Officer (CIO) at Bitwise Asset Management, stated, "People are afraid of another four-year cycle repeating," adding, "Those who do not want to experience another 50% drop are exiting the market in advance."
According to Consumer News and Business Channel (CNBC), industry experts have predicted a two-stage decline. After an initial sell-off driven by macroeconomic factors, a sharp drop due to forced liquidations is expected to follow.

Alessio Quaglini, CEO of Hex Trust, remarked that the liquidation event on October 10 was a turning point. At that time, large-scale liquidations wiped out billions of dollars in leveraged positions. He characterized this not as a loss of confidence in BTC, but as a liquidity reset, adding that this has made it difficult for the market to find its footing.
Peter Jung, Head of Research at Presto Research, pointed out, "The main factors are the liquidity shortage that followed the sharp drop on October 10 and fears that the four-year bull cycle may be ending."
Macroeconomic headwinds are also adding downward pressure. Weakened expectations for a Federal Reserve System (Fed) rate cut in December and the possibility of a prolonged US government shutdown are cited as factors dampening investor sentiment.
Tim Seon, Senior Researcher at HashKey, analyzed that tightening policies have especially impacted ETFs. He noted, "Although BTC ETFs attracted over $100 billion immediately after approval, institutional inflows have slowed dramatically due to macro liquidity tightening."
Nevertheless, some long-term investors still view BTC as a hedge against currency depreciation, inflation, and long-term monetary expansion.

Most experts interviewed by CNBC believe that the current downturn will not reverse quickly. However, they emphasize that this crisis is fundamentally different from those in the past.
Quaglini predicted that the current correction phase could persist, potentially testing the low $70,000 range or temporarily falling below it. He also drew a line, stating, "There will be no credit contagion, cascading failures, or systemic breakdowns like in 2022." He forecast that once the market stabilizes, BTC will set a new all-time high within the next 12 to 18 months.
Peter Jung advised individual investors to consider a dollar-cost averaging approach—making regular small purchases according to a systematic plan—rather than trying to time the market. He also recommended focusing on understanding the fundamentals of the BTC and Ethereum networks, rather than relying on short-term trading based on news.
hsg@fnnews.com Han Seung-gon Reporter