Bitcoin shows signs of maturity as BTC ends the year with the smallest drawdowns in any bull cycle

Bitcoin (BTC) continued the 2024 bull cycle with the smallest drawdowns to date. The higher price range is less volatile, translating into much smaller expected crashes. 

Bitcoin had the smallest drawdowns as a fraction of its price during the 2024 bull run. As the year closes, the most dramatic slide for BTC happened when the leading coin erased 32% of its value. Cycle drawdowns usually require months of recovery, while smaller price fluctuations allow for the rallies to resume faster.

Bitcoin (BTC) had the smallest drawdowns during the 2022-2024 bull cycle, but the past 12 months arrived with even lower volatility. | Source: GlassnodeThe August 5 drawdown was the record loss for the year, and in hindsight, the prime opportunity to buy the dip. Since then, BTC drawdowns and volatility have decreased further, with losses limited to 25%. 

BTC traded at $96,071.21 as of December 23, after a recent dip under $94,000. The leading coin retains a dominance of 57.3%, still retaining its lead over Ethereum (ETH).

At the higher price range, drawdowns become even smaller, as most traders are avoiding panic-selling. The recent behavior is also due to the previous experience of seeing whales buying during every dip, absorbing more of the previous retail investments.

The 2024 bull cycle outperformed while sustaining lower volatility

The 2024 bull cycle started from a low of $16,000 and extended to a peak of $108,000. Later, BTC corrected under $95,000, but with no signs of a bigger drawdown. Traders were much more cautious in 2024, though leveraged positions were still liquidated periodically. 

The 2022-2024 bull cycle followed the previous 2019-2021 price range, which was one of the most dramatic in the history of Bitcoin. From 2019 onward, BTC attempted new all-time highs, but the rally was cut short by the uncertainty of the Covid-19 pandemic. 

The previous cycle started with lows of $4,000 and peaked above $61,000. Drawdowns during that cycle reached 61.8% during the days of the biggest market panic. 

After the post-pandemic period and the crash of FTX, Bitcoin trading became more mature, finding other sources of liquidity. The leading coin still managed to become the main narrative for the year, extending its dominance to over 70% of the crypto market capitalization. 

During the most recent bull cycle, BTC also found support from corporate buying, especially the involvement of MicroStrategy (MSTR) and other mining companies building up treasuries. 

The biggest factor sustaining a relatively low volatility for this bull cycle was also the inflow of stablecoins during periods of weakened price action. This time, Tether, Inc. did not allow bigger drawdowns, and whales also bought the dip. 

BTC also did not go for a freefall as ETF buyers joined the game, buying more coins on behalf of their investors. BlackRock built one of the biggest Bitcoin reserves, after constant inflows into its ETF. At the highest price range, some whales managed to realize profits, but the overall conviction is to hold BTC as a reserve coin for a jump to an even higher price range. 

Will BTC still have a big correction?

The relatively low volatility raises questions on whether Bitcoin can return to a bear market and post a bigger drawdown. 

One long-term prediction is that BTC may slide as low as $85,000 from the $100,000 level before re-launching its 2025 bull market. BTC achieved 2% volatility on average, still allowing for dramatic price moves in the short term. 

The current BTC price based on the Rainbow chart is still in the accumulation range, with no indications of a market peak. This time around, traders are much more careful when allocating leveraged liquidity, which keeps the BTC price within a range. The biggest accumulation of liquidity is at around $93,660, potentially driving the price downward to liquidate those positions. 

The Bitcoin fear and greed index returned above 70 points, once again indicating greed. In 2024, the price moves near the BTC peak are more often caused by whale traders instead of a mix of FOMO and panic-selling. After even a small dip, greedy trading behavior returns, suggesting a short-term bullish outlook.

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