Bitcoin bull market correction deepens, but on-chain structure remains within historical range

Current on-chain data indicates that Bitcoin ($BTC) has retraced about 36% from its recent cycle peak, marking one of the deepest pullbacks in this bull market phase. On its own, this magnitude seems quite severe, but comparisons with historical cycles show that the current adjustment structure is consistent with previous bull market behavior and does not signal the formation of a macro top.

Historical cycle retracement:

In past expansion cycles, Bitcoin's adjustments typically ranged between 30% to 50%. The bull markets from 2011 to 2015 and from 2015 to 2017 experienced multiple deep pullbacks before continuing their upward trajectory. Even during the 2018 to 2021 cycle, several pullbacks exceeded 35%, while the overall upward trend remained intact. Compared to these historical periods, the current retracement magnitude is within a relatively low to medium historical range.

Market maturity brings volatility compression:

As the market matures, volatility gradually compresses. Early cycles, due to liquidity scarcity and limited institutional participation, saw deleveraging events exceeding 60%. Today, deeper derivatives markets, ETF inflows, and stronger spot liquidity help absorb selling pressure more effectively. Although leverage remains high, systemic downside risk has significantly decreased.

Short-term retracement indicators confirm recent pressure:

The weekly moving average smooth retracement indicator (SMA) has now fallen below the negative 30% region, which historically is often associated with stage adjustments and localized sell-offs. Such phases are typically driven by forced liquidations and the resetting of speculative positions.

Meanwhile, the 30-day retracement bandwidth has significantly widened, with prices noticeably below the short-term average.

Liquidity conditions and fund inflows remain decisive factors:

As long as retracements stay within a cyclically normal range, the distribution of long-term holders remains stable, and the overall bull market structure remains statistically valid, despite increased short-term volatility.

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