Bitcoin remains stable near $89,000 as market analysts suggest that the recent price pullback indicates a healthy cycle correction rather than signaling the onset of a bear market. According to Bloomberg ETF analyst Eric Balchunas, this decline reflects a natural cooling period after an impressive 122% surge over the past year. He emphasized that even if the price ends 2025 flat or slightly lower, Bitcoin is likely to retain an average annual gain of 50%.
Balchunas highlighted that all assets, including stocks, experience periods of cooling, urging observers to avoid overanalyzing the current situation. He also dismissed comparisons between Bitcoin and the tulip bubble, noting that tulips experienced a collapse following a brief period of mania, whereas Bitcoin has withstood multiple significant crashes, regulatory pressures, exchange failures, and other global shocks over its 17-year history.
Furthermore, he pointed out that many non-productive assets, such as gold and rare artworks, maintain their value. He argued that Bitcoin similarly does not rely solely on market euphoria for its valuation.
In December, the Coinbase Premium Index from CryptoQuant indicated that the recent decline in Bitcoin”s price was largely driven by selling pressure from US markets. The index fell into negative territory at the start of December, a typical time for US institutions to rebalance portfolios and engage in tax-loss selling. This pattern has historically been associated with pauses in rallies or stress phases within the market.
However, this year presented a notable difference, as the premium swiftly rebounded into positive territory within days. CryptoQuant posited that this transition often signals that selling pressure has diminished, allowing for renewed demand in the US market. The future stability of Bitcoin”s price may depend heavily on US liquidity dynamics, derivatives behavior, and incoming capital flows.
Another analyst from CryptoQuant, Carmelo Aleman, pointed out a decline in Open Interest (OI) across all trading platforms, indicating that both price and OI have dropped concurrently. This trend does not signify spot selling; rather, it reflects the closure of futures positions. Aleman noted that a decrease in OI helps eliminate excessive leverage from the market, which can create misleading momentum driven by short-term derivatives. He echoed Balchunas” sentiments, asserting that this current phase represents a reset rather than the beginning of a bearish market.
In summary, while Bitcoin”s recent price fluctuations may cause concern among some investors, analysts argue that they are part of a healthy market correction, with the potential for upward movement as US market activity stabilizes.
