History suggests 365 days to a bottom – but this Bitcoin cycle is rewriting the script
Bitcoin is firmly in correction mode, yet the key question for traders and long‑term investors is whether this is the late stage of a bear market or just the beginning of a deeper slide. Over the past month, the leading cryptocurrency has shed roughly 29%, reviving memories of previous brutal drawdowns – but also prompting debate over whether this cycle is following the old playbook at all.
On Tuesday, Bitcoin slipped a further 2% to around $67,000, moving in tandem with a broader wave of risk aversion as U.S. markets reopened after the Presidents’ Day break. The weakness was not isolated to crypto: risk-sensitive parts of the equity market – particularly technology and software – also came under renewed pressure.
Tech and software wobble as investors reassess risk
While headline equity indices held near flat on the day, their stability masked stark divergences beneath the surface. The Nasdaq‑100 lagged major benchmarks, edging down about 0.3%. The drop was sharper in high‑growth software names: the iShares Expanded Tech‑Software Sector ETF slid more than 2.7% in midday New York trading.
That software‑focused fund has now recorded losses in 11 of the past 15 sessions, leaving it nearly 25% lower year‑to‑date. The pullback underscores a broader investor struggle to price the impact of artificial intelligence on existing business models. Markets are increasingly trying to sort AI beneficiaries from those most vulnerable to disruption, and anything perceived as overvalued, speculative or structurally challenged has been hit hardest – a category that, at times, has included both unprofitable tech and high‑beta crypto.
At the same time, more defensive or previously unloved areas showed signs of life. Financial stocks bounced after several weeks of underperformance, suggesting some rotation into value and balance‑sheet strength. Consumer staples, by contrast, lagged, reflecting a market still caught between seeking safety and chasing cyclical upside.
Travel and leisure emerge as pockets of strength
One of the clearest bright spots came from travel‑linked names. Norwegian Cruise Line Holdings jumped 11% after Elliott Investment Management disclosed that it had built a stake of more than 10% and intended to push for strategic changes following years of relative underperformance. The activist interest triggered a sympathy rally across the cruise segment: Carnival Corporation gained around 4%, while Royal Caribbean added roughly 3%.
The broader travel and leisure space also saw renewed buying. Airbnb rose 3.7%, extending its post‑earnings momentum from the prior week as investors reassessed demand trends and profitability. Southwest Airlines climbed more than 6% after multiple analyst upgrades from major Wall Street firms, signaling a more constructive view on airlines despite ongoing operational and cost headwinds.
The contrasting performance across sectors highlights a central theme of this market: not all risk assets are moving together. While some cyclical and consumer‑facing names attract fresh capital, highly speculative growth and digital assets are encountering renewed skepticism.
Bitcoin’s 29% slide reignites cycle comparisons
Against this backdrop, Bitcoin’s drop of about 29% in the last month has reignited a familiar debate: are we nearing the end of a bear phase or just in the early innings?
Market participant Altcoin Sherpa has drawn parallels with prior cycle structures. In both the 2017-2018 and 2021-2022 bear markets, Bitcoin ultimately suffered deep drawdowns in the 75%-85% range from peak to trough. In those episodes, it took roughly 12 months from the cycle’s all‑time high to the eventual bottom.
Those earlier cycles shared some defining characteristics:
– A euphoric parabolic surge to record highs
– A prolonged bleed lower, punctuated by occasional sharp rallies
– A final, violent capitulation event – such as the late‑2018 crash from about $6,000 to $3,000, or the 2022 collapse tied to the unwinding of major crypto institutions – followed by months of sideways accumulation as interest and volatility faded.
Historically, that final year‑long descent, culminating in capitulation, has been seen as a cleansing process that flushes out leverage, speculative excess and weak hands, allowing a more durable bull market foundation to form.
Why this crypto cycle may not follow the old template
Despite these historical rhymes, Sherpa and many other observers argue that the 2024-2025 cycle may be structurally different. Several factors set the current environment apart from prior Bitcoin booms and busts.
First, the recent rally was notably less vertical than the explosive moves seen in 2017 or the post‑COVID surge in 2020-2021. Instead of a straight‑line melt‑up, Bitcoin spent extended periods consolidating within broad ranges, especially between $50,000 and $70,000. That kind of range trading can act as “stealth accumulation,” where stronger hands gradually build positions while speculative froth is absorbed.
Second, the rise of spot Bitcoin exchange‑traded funds has changed the market’s underlying demand profile. With institutional and advisory channels now able to access Bitcoin through regulated vehicles, flows are less dominated by high‑leverage retail traders on offshore derivatives platforms. That can dampen both upside blow‑off tops and downside liquidations, potentially shortening or softening bear phases.
Third, speculative excess in altcoins appears to have been partially flushed out earlier and more aggressively this time. Many smaller tokens have already retraced far more than Bitcoin, reducing the kind of broad, late‑cycle mania that typically accompanies ultimate peaks. With less froth to burn off, the market may not need a prolonged, 365‑day grind lower to reset.
Finally, Bitcoin has repeatedly shown strong buying interest in the $50,000-$70,000 zone, establishing what looks like a significant structural support band. Deep, multi‑month breaks below such well‑defined demand zones have been rarer in recent institutional‑driven phases of the market.
Has capitulation already happened?
Altcoin Sherpa argues that the key capitulation moment might be behind us. In his view, the aggressive move from the six‑figure region down toward $60,000 represented a decisive flush of overconfidence and leveraged positioning.
According to this interpretation, the market has transitioned from the capitulation phase into accumulation – a period when price action is choppy, sentiment is mixed, and volatility can remain elevated, but the dominant dynamic is strategic buying rather than forced selling. Historically, such accumulation phases have lasted anywhere from a few weeks to several months.
If that framework proves correct, Bitcoin might not need to endure a full year‑long descent from peak to trough in this cycle. Instead, the market could carve out a broad base relatively higher than prior cycle lows, supported by institutional flows, ETF demand and a maturing investor base.
Macro headwinds still matter
Even if the cycle structure is evolving, macroeconomic forces remain a critical variable. The same risk‑off impulses dragging on software stocks and speculative tech are also weighing on digital assets. Expectations for central bank rate cuts, inflation trajectories and economic growth continue to shape risk appetite.
A senior Federal Reserve official has recently hinted at the potential for several rate cuts ahead, a development that would ordinarily be supportive of risk assets like Bitcoin. However, markets are torn between anticipating easier policy and worrying about the economic weakness that might prompt such moves. In that environment, Bitcoin is being traded both as a high‑beta risk asset and, at times, as a macro hedge – a dual identity that can make short‑term price action more volatile and less intuitive.
What shorter bear phases would mean for investors
If this cycle does deviate from the traditional 365‑day grind to a bottom, the implications for both traders and long‑term holders are significant.
For active traders, a compressed bear market means less time to slowly accumulate at distressed prices, but potentially more frequent, sharper rotations between fear and optimism. Relying solely on historical duration patterns could be dangerous if structural shifts – such as institutionalization, ETF flows and regulatory clarity – have genuinely reshaped the market.
For long‑term investors, the key may be to focus less on trying to pinpoint an exact bottom and more on managing risk across probable ranges. If the $50,000-$70,000 zone continues to act as a magnet for both buyers and sellers, dollar‑cost averaging and maintaining a multi‑year horizon may prove more practical than attempting to time capitulation to the day, week or month.
Risk management in an evolving Bitcoin market
Regardless of where Bitcoin is in its cycle, the current environment highlights the importance of disciplined risk management. Even if the drawdown this time ends up being shallower and shorter than past 75%-85% collapses, volatility remains extreme compared with traditional assets.
Prudent position sizing, clear time horizons and an understanding of liquidity conditions are essential. Investors should also recognize that correlations between Bitcoin, tech stocks and macro variables can shift rapidly. Periods of tight correlation – where Bitcoin trades almost like a leveraged Nasdaq proxy – can give way to phases where crypto follows its own narrative, driven by halving cycles, regulatory developments, or internal industry events.
The bottom line: familiar patterns, new dynamics
The historical pattern of “365 days to the bottom” from prior Bitcoin cycles provides a useful frame of reference, but it is not a rule. The current correction – a roughly 29% drop to around $67,000 – is unfolding in a much more mature, institutionally influenced market than in 2018 or even 2022.
With spot ETFs, a possibly earlier capitulation, stronger structural support zones and a different macro backdrop, this bear phase may resolve faster and at higher levels than many prior episodes. At the same time, the combination of tech‑sector jitters and shifting monetary expectations ensures that volatility is unlikely to fade quickly.
For now, the evidence points to a market somewhere between fear and opportunity: not clearly at the euphoric peak of a bubble, but not necessarily at the deep despair of a classic bottom either. Whether the cycle truly breaks from its historical 365‑day pattern will depend on how these competing forces – macro, institutional flows and investor psychology – play out in the months ahead.