With Bitcoin currently hovering around 50% beneath its all-time high, investors find themselves revisiting a common inquiry: what is the typical duration for recovery? Market analyst Sam Daodu asserts that history provides significant insights. Daodu highlights that significant corrections are a common occurrence for Bitcoin. Since 2011, the cryptocurrency market has faced over 20 significant pullbacks, each exceeding 40%. Mid-cycle declines typically fall within the 35% to 50% range, effectively cooling off overheated rallies while not permanently disrupting long-term uptrends. In scenarios where the broader market has not experienced a systemic breakdown, Bitcoin has generally managed to reclaim its previous highs within approximately 14 months. He draws a comparison between the present landscape and that of 2022, a year marked by significant structural failures that rattled the crypto industry. Currently, there is no similar collapse sending shockwaves through the system. The analyst pointed out that BTC’s realized price—currently hovering around $55,000—could serve as a psychological and technical support level, given that long-term holders have traditionally gathered coins at that price point.
Daodu indicates that the future of the current downturn—whether it transforms into a prolonged slump or a brief reset—will significantly depend on global liquidity conditions and investor sentiment. In the cycle spanning 2021 to 2022, Bitcoin reached an all-time high of $69,000 in November 2021, only to plummet to $15,500 a year later, marking a staggering 77% decline. The downturn occurred simultaneously with the US Federal Reserve’s monetary tightening, as well as the collapse of the Terra ecosystem and the bankruptcy of FTX. After a lengthy 28-month wait, Bitcoin finally broke through its previous all-time high in March 2024. At the market bottom, long-term holders accounted for approximately 60% of the circulating supply, taking in coins from those compelled to sell.
The 2020 COVID‑19 crash played out in a markedly different manner. In March of that year, Bitcoin experienced a dramatic plunge of around 58%, dropping from roughly $9,100 to $3,800 as global lockdowns initiated a liquidity shock. Bitcoin made a swift recovery. The asset successfully reclaimed the $10,000 level within a span of six weeks and surged back to its 2017 peak of $20,000 by December 2020, roughly nine months following the market bottom. The remarkable rise to $69,000 in November 2021 occurred approximately 21 months following the market crash. The 2018 bear market showcases yet another stark contrast. Following its peak at $20,000 in December 2017, Bitcoin experienced a staggering decline of 84%, plummeting to $3,200 by December 2018. The collapse of the initial coin offering boom, alongside regulatory actions and restricted institutional involvement, sapped the speculative vigor from the market. Active addresses saw a staggering decline of 70%, prompting miners to capitulate amid shrinking revenues. Absent substantial new investment or an enticing growth story, Bitcoin took almost three years to return to its former high.
The magnitude of the drawdown is pivotal. Historically, corrections in the 40% to 50% range have taken approximately nine to 14 months to reverse, whereas collapses exceeding 80% have necessitated three years or more for recovery. Bitcoin has seen a decline of approximately 50% from its peak, a drop that Daodu categorizes as moderate-to-severe—significant, yet not necessarily a sign of complete capitulation. Drawing from past instances of comparable scale, he anticipates that a resurgence to earlier peaks may require 12 months or longer, with overarching economic factors ultimately influencing the pace of that recovery. At the time of this report, BTC was priced at $68,960, showing a modest recovery on Friday with a 5% rise as it seeks to break through the short-term resistance level at $70,000.