Bitcoin could face potential 70% drawdown as selloff revives bear market fears

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Bitcoin could face potential 70% drawdown

Highlights

Bitcoin has fallen to about $60,000, losing more than 30% in a week and entering what analysts call a capitulation phase.
Large holders sold 81,068 BTC in eight days, increasing market supply during low-liquidity conditions.
Historical drawdowns suggest a potential 70% peak-to-trough decline, pointing to a possible bottom near $38,000.
Some investors argue institutional demand could limit losses to 55%–60%, though uncertainty remains high.

The move extends a steep decline from the October peak and has erased an estimated $1.2 trillion in total crypto market value, according to market data.

Over the past week alone, Bitcoin has dropped more than 30%, prompting some analysts to describe market conditions as a phase of “full capitulation.” The scale and speed of the decline have revived comparisons with past bear markets, when prolonged drawdowns reshaped trading strategies and investor behavior for months.

Whale іelling and Historical Patterns Fuel Bearish Outlook

On-chain data suggest that large holders have played a central role in the latest slide. Wallets classified as “whales” and “sharks,” holding between 10 and 10,000 BTC, now control 68.04% of Bitcoin’s circulating supply, a nine-month low.

According to Santiment, these entities sold 81,068 BTC in the past eight days, adding significant supply during a period of thin liquidity.

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Crypto analyst known as Sherlock has mapped the current cycle against previous bear markets, noting that Bitcoin experienced peak-to-trough drawdowns of roughly 93% in 2011, 86% in 2015, 84% in 2018, and 77% in 2022. If the pattern of gradually smaller declines continues, Sherlock projects a potential 70% drawdown this cycle, implying a possible bottom near $38,000.

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Debate over how deep the decline could go

Not all market participants share the most bearish projections. Critics on social media argue that increasing institutional participation could limit losses to a 55%–60% correction, softer than earlier cycles.

They point to the growth of regulated investment products and deeper liquidity as stabilizing forces. Sherlock counters that market reflexivity can amplify moves in both directions, cautioning traders against attempting to time a precise bottom. With Bitcoin now trading near levels last seen in October 2024, analysts say the next phase will depend on whether selling pressure eases or accelerates further.

Why is this important

Bitcoin’s price trajectory influences risk appetite across the entire crypto market. A deeper drawdown could force traders to reassess leverage, time horizons, and capital allocation, while long-term investors may weigh whether lower prices present accumulation opportunities or signal structural weakness.

The outcome of this correction will likely shape portfolio strategies, liquidity conditions, and sentiment for digital assets in the months ahead.

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