Bitcoin Correction to $73,000: Why Historical Volatility Remains Within Normal Range

Bitcoin Correction to $73,000: Why Historical Volatility Remains Within Normal Range

Bitcoin's price marked its lowest level in a year on Tuesday at $72,945, placing it nearly 45 percent below its all-time high of $126,267 ^[1]. While many investors already fear the end of the bull cycle, market analysts paint a more nuanced picture: current volatility continues to move within historical normal ranges and could be symptomatic of a rapidly monetizing asset. At the same time, the correction is putting massive pressure on treasury companies like Strategy—the company now faces unrealized losses on its 713,000 Bitcoin.

The correlation between traditional risk assets and Bitcoin is particularly evident in this market phase, while macroeconomic conditions with political uncertainties and doubts about the AI infrastructure rally create additional strain.

The Facts

Bitcoin broke through the psychologically important $75,000 mark downward on Tuesday, reaching a new yearly low of $72,945 ^[1]. The price is currently down approximately 7 percent and has recorded a loss of 15 percent since the beginning of the year ^[1][3]. Other major cryptocurrencies recorded even steeper losses of over 10 percent, while the Fear & Greed Index, at 17 points, hovers just above the extreme fear territory ^[3].

The turbulence in the crypto market is also reflected in massive liquidations: long positions in Bitcoin were forcibly liquidated to the tune of $127.25 million, while Ethereum's volume amounted to $159.1 million ^[1]. These forced liquidations further intensified selling pressure.

Treasury company Strategy was particularly hard hit: the stock plunged more than 8 percent, falling to levels last seen at the end of 2024 ^[2]. With 713,502 Bitcoin on its balance sheet at an average purchase price of $76,052 per coin, the company now faces unrealized losses approaching one billion dollars ^[2]. Strategy had just purchased an additional 855 Bitcoin last week at an average price of $87,974 ^[2]. However, Chairman Michael Saylor unequivocally reaffirmed that the company will not sell and will instead continue its accumulation strategy even during weak market phases ^[2].

Traditional stock markets also show significant weakness: the S&P 500 lost around 1.2 percentage points, while tech giants like Nvidia fell 5 percent, Microsoft 2.7 percent, and Amazon 2.67 percent ^[1][3]. PayPal even recorded a price crash of 20 percent ^[3]. This development indicates a broad sell-off of risk assets, while safe-haven investments like gold and silver each gained 5 percent ^[3].

Observers identify several factors as the main reasons for the market turmoil: investors are increasingly questioning the sustainability of valuations in the AI sector and fear that product demand and revenues could fall short of industry forecasts ^[1]. In addition, there are political uncertainties due to the partial U.S. government shutdown, which is not expected to end until February 13, as well as increasing geopolitical tensions ^[3].

Despite the negative sentiment, Joe Burnett, Vice President of Bitcoin Strategy at Strive, views the current situation calmly: "The price action at $74,000 still remains within historical normal ranges," he explained ^[1]. Burnett notes that the 45 percent drawdown closely aligns with historical volatility and adds: "Volatility of this magnitude remains a symptom of a rapidly monetizing asset" ^[1].

Alex Thorn, Head of Research at Galaxy Digital, identified a significant supply gap in on-chain data between $82,000 and $70,000 and cites the range between $56,000 and $59,000 as a potential target zone, which corresponds to the Realized Price ^[3]. Orderbook data from TRDR.io shows that buy bids are concentrated in the range between $71,800 and $63,000 ^[1].

Analysis & Context

The current correction may be painful for many investors, but it clearly moves within the parameters of previous Bitcoin cycles. Drawdowns of 40 to 50 percent during a bull market are historically not uncommon—even in the 2020/2021 cycle, Bitcoin experienced several corrections of over 50 percent before reaching new all-time highs. Joe Burnett's statement that this volatility is a characteristic of a monetizing asset hits the mark: Bitcoin continues to undergo the transformation process from a speculative asset to a globally recognized store of value.

Particularly revealing is the re-correlation between Bitcoin and traditional risk assets. After a phase of relative decoupling, Bitcoin is once again closely following tech stocks and reacting sensitively to macroeconomic uncertainties. This shows that despite its increasing maturity as an asset, Bitcoin has not yet assumed the safe-haven role that some maximalists attribute to it. The flight to gold and silver during this correction clearly underscores this. In the long term, however, this could be positive: once macroeconomic uncertainties subside and risk assets are in demand again, Bitcoin should benefit disproportionately.

Strategy's situation deserves special attention, as it exemplifies the challenges of the treasury strategy. With an average purchase price of $76,052, the company is now in unrealized loss territory. That Michael Saylor continues to accumulate and categorically rules out selling sends a strong signal to the market. This behavior could have a stabilizing effect in the medium term, but in the short term, the question remains how the stock market will react to persistently low Bitcoin prices and whether this will limit financing options for further purchases. Alex Thorn's on-chain analysis, which points to a potential further correction in the $56,000 to $59,000 range, should be taken seriously—this Realized Price historically represents an important support zone where long-term holders typically accumulate.

Conclusion

• The 45 percent Bitcoin correction may appear dramatic but moves within historical volatility patterns of past bull cycles and does not yet represent a structural anomaly

• The strong correlation with traditional risk assets shows that Bitcoin has not yet assumed the safe-haven role that is being pursued long-term—in the short term, the macroeconomic environment remains the dominant price driver

• Strategy exemplifies the challenges of the treasury strategy with unrealized losses, but Saylor's consistent accumulation could act as a strong confidence signal in the medium term

• The identified supply gap and potential support zone between $56,000 and $63,000 should be monitored as relevant areas for possible stabilization

• Investors should closely follow the earnings season in the coming week and political developments until February 13, as these will likely have more influence on Bitcoin's price than crypto-specific factors