Market veteran Peter Brandt has suggested that Bitcoin could correct by as much as 75%, citing historical data.
His recent commentary comes on the back of the latest Bitcoin crash below $90,000 on December 1. While some market commentators have attributed the drop to a cascading effect from the Japanese yen’s spike, others insist it may have been due to over-leveraged positions in a low-volume environment, as more than $725 million in long positions has gone bust in the last 24 hours.
Despite the bearish turn of events, some market watchers expect a rebound, but not Brandt. Peter Brandt has flipped bearish on Bitcoin, citing historical data from its cyclical performance to call attention to a possible 75% correction for the price.
Bitcoin's Historical Pattern of Significant Corrections After Parabolic Advances
Specifically, the market veteran highlighted a "dominant parabolic advance" that Bitcoin typically observes during its bull run. According to him, Bitcoin has witnessed five bull markets since it launched in 2009, and each of these bull markets featured this dominant parabolic advance, which he identified as an upward-sloping line that guided the upward price action.
Meanwhile, this trendline, which appears on the weekly chart, has done more than just guide Bitcoin’s upward push; it has also acted as a reliable indicator for when the bull market has faced exhaustion. Brandt found that whenever Bitcoin’s price broke below the parabolic advance trendline, its price corrected further by 75% or more.
This pattern has played out perfectly over the past five bull markets. In the first instance, after the 2011 bull rally, BTC dropped below the parabolic line in June 2011 to $15. In the following weeks, Bitcoin collapsed further, eventually crashing to a low of $1 by November 2011, marking an 86% drop.
The same pattern occurred after the 2013 rally, with BTC crashing 80% from $827 in December 2013 to $162 in August 2015. Bitcoin broke below the trendline again in December 2017 and dropped 77% from $14,059 to $3,125 in December 2018. In the fourth instance, BTC dropped below the trendline in April 2021 and crashed 74.2% from $59,980 to $15,479 by November 2022.
Current Market Conditions Mirror Historical Breakdowns
Now, a similar structure has taken shape in the ongoing bull market. Data from Brandt’s chart shows that the current parabolic advance trendline began on the back of the recovery from the FTX-induced crash in November 2022. BTC had continued to trade above this trendline since then, until the recent market struggles led to a break below the line early last month.
If history is anything to go by, Bitcoin could be on track to record a drop of at least 75% in what seems to be an imminent bear market. For perspective, a 75% crash from the decline point of around $103,000 would lead to a Bitcoin price of $25,750. "You better have a great reason to bet against this pattern," Brandt said.
Meanwhile, analysts like Michaël van de Poppe still believe the bull run remains intact, and this may be just another correction. Following the latest December 1 crash, he maintained that nothing has changed, predicting a retest of the resistance area between $90,000 and $94,000 with a possible rally to break above the $100,000 mark for the first time since mid-November.
