If Bitcoin’s recent slide felt unsettling, you’re not alone. The world’s biggest cryptocurrency has eroded much of its 2025 advance and sent shock-waves through crypto markets.

Since topping around $126,000 in October, Bitcoin has dropped sharply, with some estimates pointing to more than a 25 % decline.  That plunge has wiped out hundreds of billions in market value—estimates suggest the crypto market has lost roughly $600 billion or more since the peak.  The question now: is this just a nasty correction or the beginnings of another major drawdown—potentially 50 % or more?

Why the Bleed Happened

Several forces converged to spark the drop. Liquidity has dried up. According to reports, Bitcoin dipped below $94,000, forming lower highs and lower lows, a classic technical sign of weakness.  At the same time, crypto-sentiment is collapsing: one indicator dropped into the teens, reflecting extreme fear. 

On the macro side, the backdrop isn’t helping. Investors are worried about higher-for-longer interest rates, weaker risk assets and the fact that the most recent surge may have priced in too much optimism. The crypto market, which often trades like a leveraged play on growth and innovation, is more exposed when sentiment shifts.

The 50 % Drawdown Risk

Historically, Bitcoin’s major drawdowns are dramatic. Previous cycles have seen losses of 70 % or more from cycle peaks. That means a 50 % drop is far from unprecedented. Given a current peak near $126 k, a 50 % slide would target around $63,000. While that may sound extreme, given the magnitude of past moves and current fragility in the market, it’s within the realm of possibility.

Nonetheless, some analysts believe this slump is still early in its lifecycle. One firm noted that the 25 %-plus drop so far likely qualifies as a correction rather than a full bear phase.  The difference matters because in a full bear cycle the downside can stretch further, and timeframe becomes much longer.

Signs to Watch For

To figure out whether Bitcoin is heading toward a deeper drawdown or simply consolidating, watch for three key signals:

• Liquidity and flow dynamics: If ETF outflows, exchange withdrawals and realised losses pick up, the downside risk expands.

• Macro risk sentiment: If risk assets broadly roll over and safe-haven bids strengthen, crypto often follows.

• Technical behaviour: If Bitcoin fails to reclaim key support levels, breaks below former lows and shows weak bounce behaviour, then a deeper slide is more likely.

Why This Matters

For investors in Bitcoin, the implications are clear. A 25 % drop is painful. A 50 % drop could force a reckoning—particularly for holders who bought near the peak or used leverage. But on the flip side, if you believe in Bitcoin’s long-term narrative (digital gold, store of value, institutional adoption), a deeper drawdown may offer a rare entry point.

Final Thoughts

Bitcoin’s recent fall is more than just a bad week. It reflects deeper shifts in sentiment, liquidity and risk appetite. Whether it turns into a full-blown 50 % drawdown depends on broader market dynamics and how the crypto asset responds to stress. If you’re holding, now is a time for clarity, not panic. If you’re watching, now might be a time to prepare for outcomes in both directions—brutal or opportunistic.