Grayscale: Bitcoin Correction Within Historical Average – New All-Time Highs Possible in 2025

Correction Within Scope of Historical Bull Markets

Bitcoin has recorded a price decline of 32 percent since early October – a development that, according to Grayscale Research's latest monthly report, corresponds almost exactly to the historical average ^[1]. Since 2010, there have been approximately fifty declines of at least ten percent, with a median magnitude of 30 percent ^[1].

Grayscale's research team distinguishes between long-term cyclical drawdowns lasting two to three years and short pullbacks during bull markets, which average two to three months ^[1]. The analysts clearly categorize the current movement in the second category: "The current correction falls entirely within the scope of historical bullish pullbacks" ^[1].

Indicators Point to Bottom Formation

According to Grayscale, several technical and fundamental indicators suggest a possible bottom formation. Particularly noteworthy is the strong hedging via put options. "The elevated put skew shows that market participants have already extensively hedged their downside risk," Grayscale writes in its report ^[1].

Simultaneously, inflows into ETFs remained modest through the end of November, while futures open interest continued to decline ^[1]. On-chain data also showed a renewed increase in Coin Days Destroyed, indicating movement of older Bitcoin holdings ^[1].

Deleveraging Event Clears Market

On Monday, the crypto market experienced a massive deleveraging event, with Bitcoin falling up to eight percent and Ethereum dropping up to ten percent ^[2]. In total, one billion US dollars in leveraged positions were liquidated ^[2]. The backdrop was rising probability of interest rate increases in Japan, which would negatively impact global liquidity ^[2].

Nevertheless, much suggests that the risks are already largely priced into Bitcoin. BTC ETFs recorded inflows of 74.4 million US dollars on Monday despite the selloff ^[2]. The Bitcoin price stabilized at 86,910 US dollars with a modest gain of 1.1 percent ^[2].

Macroeconomic Framework in Focus

At the macroeconomic level, attention turns to the next US Federal Reserve meeting on December 10 ^[1]. The market is currently pricing in an 87.2 percent probability of a rate cut in December ^[2].

According to US media, Kevin Hassett is considered the leading candidate to succeed the current Fed chairman ^[1]. Hassett stated in a September CNBC interview that the rate move at that time was "a good first step" toward "much lower rates" ^[1].

Another positive signal comes from the political sphere: The US Senate Agriculture Committee released its bipartisan draft for digital asset market structure in November ^[1].

Outlook: New All-Time Highs Possible in 2025

Grayscale remains optimistic about future developments: "We see no imminent deep, long-term selloff and consider new all-time highs possible in the coming year" ^[1]. The analysts expect the current correction phase to potentially be completed within a few weeks ^[1].