While the declines in the cryptocurrency market seem to be coming to an end, there is still debate as to whether these declines are a bear market signal or a temporary correction.
The final comment on this point came from Bernstein, who has more than $750 billion in assets under management.
Bitcoin's Drops: Correction or Bear Market?
According to The Block, Bernstein stated in his latest report that the recent Bitcoin declines are a short-term correction rather than a transition to a bear market.
Bernstein analysts led by Gautam Chhugani stated that the recent sell-off in Bitcoin is a short-term correction driven by concerns about the four-year cycle peak.
Analysts said investors who experienced cycle peaks in 2013, 2017, and 2021 sold in advance against the weakness in the fourth quarter because they believed the cycle peak was in 2025, according to the historical cycle pattern.
Recalling that there have been major declines of 60-70% in past cycles, Bernstein stated that BTC has only experienced a drop of around 25% from its last ATH, which is a relatively superficial correction rather than a structural bear market.
Bernstein also said that investors who had held for more than a year sold 340,000 BTC ($38 billion) in the last six months, but that supply was largely absorbed by spot ETFs and companies.
“In the last six months, investors sold 340,000 BTC worth $38 billion, but this sale was covered by ETFs and treasury companies, who bought $34 billion.
Additionally, institutional ownership in spot Bitcoin ETFs rose to 28% from 20% at the end of last year.
Despite net outflows over the past three weeks, these ETFs currently have total assets under management of $125 billion, providing a significant buffer against selling pressure.
Not a Cyclical Peak for Bitcoin
Analysts emphasized that the current market situation does not appear to be a cyclical peak phase. Rather, the market is part of a multi-year uptrend characterized by institutional participation and moderate corrections.
However, analysts pointed to $80,000 as a possible bottom area if the decline continues and said that the decline would be a buying opportunity for long-term investors.
No Immediate Danger for MicroStrategy
Finally, Bernstein also addressed the claims that MicroStrategy might sell its BTC, pointing out that the company's management has publicly stated that it has not sold a single BTC and has no intention of doing so.
In this context, Bernstein analysts stated that there is no threat to MicroStrategy, saying, “MicroStrategy has $8 billion in debt against $61 billion in Bitcoin assets and therefore has a conservative leverage ratio. Dividends are well covered by the treasury and it has access to more capital through market programs. Therefore, we do not see a threat.”