#Gate广场圣诞送温暖 Bitcoin experiences a sharp correction: What’s next amid multiple converging factors?

On November 24, 2025, the price of Bitcoin hovered around $87,000, down about 34% from the all-time high of $126,210 set on October 6, with a monthly decline exceeding 20%. At the same time, technology stocks such as the Nasdaq 100 Index also saw significant corrections, with AI-related stocks leading the global risk asset selloff. This round of adjustment is not an isolated event, but rather the result of multiple factors including the technology cycle, macro liquidity, institutional behavior, and internal community disputes. Based on the latest market data and historical patterns, this article provides a comprehensive analysis of the current correction and evaluates possible future paths.

I. Technical Analysis Perspective: Extended Cycle and Breakdown of Key Support Levels
Bitcoin’s price movement has long followed a four-year halving cycle. After the fourth halving in April 2024, this bull cycle started from the bottom at the end of 2022 and peaked in October 2025—lasting about 1,095 days, longer than the 2021 cycle, but with more moderate gains (from a low of about $16,000 to $126,210, about 7x, whereas the 2017 and 2021 cycles saw over 20x returns).
Two indicators long emphasized by renowned technical analyst Benjamin Cowen played a key role in this correction:
50-week Simple Moving Average (50-week SMA)
The current 50-week SMA is around the $86,000-$88,000 range. In mid-November, Bitcoin closed below this line for several consecutive weeks—the first such signal in this bull market. Historical data shows that when Bitcoin breaks below the 50-week SMA during a bull market, it usually marks the end of bull momentum and the start of a bear phase. In his latest November analysis, Cowen stated that this breakdown confirmed a “bull market end signal” and predicted that Bitcoin may test the 200-week SMA (currently around $60,000-$70,000) in 2026.

Cycle Length Pattern
Cowen’s “lengthening cycle theory” suggests the time from low to high this cycle is similar to previous ones (about 1,500 days), and the bear phase from peak to next low may last around 364 days. Using the October 6 peak as a reference, a potential bottom could appear around October 2026, with a target price range of $40,000-$60,000. This pattern has closely matched the past three cycles, and the current “lengthening” feature (longer post-halving rally, milder gains) further strengthens its predictive value.

Additionally, short-term indicators such as RSI and MACD show oversold conditions, while the MVRV Z-Score has dropped to around 2, indicating valuations have returned to a reasonable zone, but not yet to extreme undervaluation. The average cost basis for 2025 buyers is about $103,227, meaning most institutional investors are now facing a 13% unrealized loss, further intensifying selling pressure.

II. Macro Liquidity Perspective: Double Whammy from Yen Carry Trade Reversal and Fed QT Termination
Since the second half of 2025, global liquidity conditions have undergone dramatic changes, becoming the core macro driver of this correction.

Massive Reversal of Yen Carry Trades
The Bank of Japan’s continued rate hikes have pushed long-term government bond yields to historic highs (40-year yield at 3.697%), making yen-funded carry trades into high-yielding USD assets no longer attractive. With an estimated $20 trillion in yen carry positions being unwound, funds have flowed back to Japan, leading to selloffs in USD assets (including Bitcoin, US Treasuries, and tech stocks). Two concentrated reversals in August and November triggered global risk asset flash crashes, with Bitcoin dropping more than 17% in November alone—moving in close sync with the Nasdaq.

“Bad-news-good-news” of Fed QT Ending Early
On October 29, the Fed announced that starting December 1, it would end quantitative tightening (QT), no longer allowing Treasuries to roll off, and instead reinvesting principal in full. This decision came six months earlier than market expectations, as bank reserves had fallen to the warning line and short-term funding markets were showing signs of stress. However, the market interpreted this as “the Fed sees signs of financial system fragility,” sparking risk asset selloffs. Although halting QT objectively stopped the monthly $95 billion liquidity drain, the short-term psychological impact was more significant.

Global Risk Appetite Falls
Overvalued AI stocks faced profit-taking pressure, and with Fed rate cut expectations pushed back (odds of a December cut dropped below 50%), risk assets broadly came under pressure. As an asset with both “digital gold” and “tech stock” attributes, Bitcoin became the “canary in the coal mine”—its 24/7 trading and high liquidity allowed it to lead price discovery.

III. Institutional Behavior Perspective: Record ETF Outflows and Early Holder Profit-Taking
In 2025, US spot Bitcoin ETFs were once the main engine of the bull market, with net inflows exceeding $50 billion in the first 10 months. But November saw a dramatic shift:

Net outflows for the month reached $3.79 billion, a record high, with BlackRock’s IBIT alone seeing $2.47 billion in outflows. Single-day outflow peaks exceeded $900 million, mainly from retail investor redemptions, while institutional investors (hedge funds, etc.) reduced positions more via OTC channels.
JPMorgan analysis indicated that this round of outflows was mainly retail-driven, not from crypto-native investors deleveraging. The average 2025 purchase cost was about $90,000, and with prices now below this level, “stop-loss” redemptions were triggered.
At the same time, early holders (OGs) took significant profits. Bitcoin ETFs and corporate treasuries (like MicroStrategy) provided unprecedented liquidity, allowing early miners and investors from 2013-2017 to cash out billions without crashing the market. Jordi Visser’s “Bitcoin IPO theory” was validated this cycle: it’s a wealth transfer from early few to the masses, inevitably involving long periods of sideways or downward movement.

IV. Internal Community Disputes: Ideological Rift Triggered by OP_RETURN Policy Change
In 2025, Bitcoin Core v30 (released in October) removed the OP_RETURN 80-byte limit, allowing larger arbitrary data uploads to the blockchain. Although this was only a relay policy (not a consensus rule), it sparked intense community division:

Supporters argued for code simplification and facilitating sidechains/bridges and other legitimate use cases. Opponents (including core devs like Luke Dashjr) worried this would encourage “junk data” (images, files, etc.) on-chain, raising node operation costs, potential legal risks, and deviating from Bitcoin’s “sound money” ethos.

While the controversy did not directly cause price drops, it intensified some OGs’ exit sentiment and reinforced the narrative that “Bitcoin is being attacked from within,” resonating with technical breakdowns and macro tightening.

V. Overall Assessment & Outlook
The current correction is not due to a single cause, but is the result of the convergence of cycle peak signals, macro liquidity tightening, institutional profit-taking, and community disputes. As the most liquid risk asset, Bitcoin has led and exaggerated the global shift toward “risk aversion.”

Short term (before end of 2025): Oversold indicators show a higher probability of a rebound, possibly retesting the 200-day SMA (about $104,000). But if it fails to reclaim the 50-week SMA, any rebound would likely just be a bear market rally.

Medium term (2026): If historical patterns persist, Bitcoin may enter a year-long bear market adjustment, targeting $40,000-$70,000. Analysts like Cowen believe this is the inevitable cost of a “lengthening cycle”—while this bull run’s gains were large, the extended duration and broader participation mean the correction will also be “longer and milder.”

Long term: Bitcoin’s fundamentals remain unchanged (halving, institutional adoption, national reserves trend), with limited downside. After the 2026 bottom, a new cycle could begin. Current extreme fear (Fear & Greed Index at 15) often signals a phase bottom.

Investors should beware: This correction has already reached 30%—further downside will test the conviction of all 2025 buyers. Diversifying risk, watching key levels like the 50-week/200-week SMA, and avoiding excessive leverage are the most rational strategies at this time.

Bitcoin’s decade-long history proves: Every bear market paves the way for the next bull—though the process is always painful.