Bitcoin hits monthly low, growing fear of a deeper correction

Bitcoin, the market's most important cryptocurrency, has fallen more than 15% from its all-time high. Amid uncertainty and volatility, analysts now project a possible deeper correction by 2026. 

The price of Bitcoin has fallen sharply in recent weeks, raising concerns among investors and analysts. After reaching an all-time high of $126.000 in early October, the cryptocurrency fell to $104.000 and is currently hovering around $107.500 per unit. This drop of more than 15% has raised concerns about a possible change in the market cycle.

Jon Glover, CIO of Ledn and a specialist in Elliott Wave theory, argues that Bitcoin's bull run, which began in 2022, has come to an end. Speaking to CoinDesk, Glover stated that Bitcoin completed its five-wave impulsive cycle and is now entering a bearish phase that could extend until the end of 2026. According to his analysis, the price could drop to USD 70.000 or even lower, although he does not rule out technical rebounds towards USD 124.000.

Elliott Wave Theory, developed in 1938 by Ralph Nelson Elliott, posits that financial markets move in repetitive patterns driven by the collective psychology of investors. In the case of Bitcoin, Glover identifies a bull cycle that began when the asset was trading below $20.000 and culminated in the historical maximum recorded this October. In his opinion, the BTC price's break below USD 108.000 confirms the exhaustion of bullish momentum and marks the beginning of a new corrective phase.

Bitcoin shaken by tariffs, banking crisis, and excessive leverage

The macroeconomic and geopolitical context has directly influenced the volatility of the crypto market. Last Friday, October 10, the price of Bitcoin fell from USD 121.000 to nearly USD 106.000 following US President Donald Trump's threat to impose new 100% tariffs on Chinese products. This announcement triggered a record liquidation of approximately USD 19.000 billion in the crypto market, as reported by this outlet. 

Experts, such as Peter Brandt, have warned that this volatility could herald a “great cleansing” in the cryptocurrency ecosystem. According to Brandt, there is a possibility of two opposing scenarios occurring: one in which Bitcoin rebounds to new all-time highs, and another in which it breaks its parabolic structure and falls to levels between USD 50.000 and USD 60.000Although he believes the decline could be less severe than in previous cycles, his warning reinforces the need for caution.

On the other hand, Charles Edwards, founder of Capriole Investments, also spoke out about the risks of excessive leverage in the market. According to Edwards, even positions with multipliers of 1,5x can become unsustainable in a highly volatile environment. The massive liquidation of positions totaling more than USD 19.000 billion during the previous week demonstrates the market's fragility in the face of abrupt movements.

Amid this context, risk-aversion sentiment has intensified. Bitcoin is on track to close its second consecutive week of decline, as shown by CoinGecko data. The leading cryptocurrency fell 1,9% to $108.830 on Friday, October 17, accumulating a weekly loss of 3,8% after a 10% drop the previous week. The crash wiped out nearly half a trillion dollars of crypto market capitalization, dragging down other digital assets and reflecting the correlation with traditional markets.

Trade tensions between the United States and China, coupled with concerns about credit risks at U.S. regional banks and the massive liquidation of leveraged positions, have dented investor confidence. Furthermore, the prolonged U.S. government shutdown and the delayed release of key economic indicators have contributed to the uncertainty. Bank stocks suffered sharp losses, and the impact spilled over into global stock markets.

Key changes driving the crypto market despite volatility

Despite the bearish sentiment, some developments, including regulatory advances in key regions, could offer structural support to the crypto market. In Japan, for example, the Financial Services Agency (FSA) is considering regulatory changes that would allow banks to acquire and hold cryptocurrencies like Bitcoin for investment purposesAccording to Livedoor News, the FSA plans to discuss This reform will be discussed at an upcoming meeting of the Financial Services Council, with the aim of aligning cryptoasset management with traditional financial products such as stocks and bonds.

The initiative seeks to establish a risk management framework that addresses price volatility and its impact on the financial health of banking institutions. If approved, banks will have to meet specific capital requirements and controls before being allowed to hold digital assets. However, the evaluation of this proposal itself already represents a significant shift from the guidelines in place since 2020, which prohibit banks from holding cryptocurrencies.

In the United States, significant regulatory movements are also observed. Florida has expressed its intention to include Bitcoin in its state funds., while California passed a law allowing the state to hold custody of digital assets. In addition, the city of New York has pioneered the establishment of the first local office dedicated to digital assets and blockchain technology.. 

All of these developments show that, while the market faces technical and macroeconomic pressures, the regulatory infrastructure continues to evolve. The possibility of traditional financial institutions actively participating in the crypto market could change the risk profile and broaden the adoption base.