Bitcoin dropped from the $125000 range to the mid $80000s in a matter of weeks. The instinct is to call it the beginning of another deep winter. Historically, every major cycle came with a seventy to eighty percent drawdown. This correction has been sharp, but the market structure behind it looks different from previous years.

The first difference is the depth. A thirty to thirty five percent retracement is severe, but still well within the range of bull-market corrections that bitcoin has seen in the past. The large collapses that defined previous cycle tops, such as 2013, 2017 and 2021, only came after the market had exhausted liquidity and leverage at a much larger scale. That is not the setup we have today.

The second difference is the ownership profile. Roughly nineteen point six million bitcoin have already been mined, and long-term holders still control the majority of supply. But the last months have seen the most significant rotation of coins in years. An estimated thirteen percent of circulating supply has moved from long-term wallets into the market, and a substantial portion of that flow has been absorbed by spot exchange-traded funds and corporate treasuries. United States spot ETFs now custody more than one point three million bitcoin. This is a structural handover from early holders to regulated, institutional vehicles. When ownership shifts at this scale, price becomes more volatile, but it does not necessarily signal a trend reversal.

The third and most important factor is global liquidity. Bitcoin’s long-term correlation with global liquidity has been extraordinarily high. When major central banks expand liquidity, bitcoin strengthens. When they withdraw liquidity, it weakens. The contraction that started in 2022 is now slowing. Several central banks have already moved toward an easing stance, excess liquidity indicators have stabilized, and global M2 growth has begun to accelerate again. Historically, bitcoin bottoms after liquidity turns, not before. The conditions we see today align more with a mid-cycle correction than a full macro reversal.

Short term, volatility remains elevated. Leverage has been flushed out, ETF flows have been mixed, and institutions are still adjusting their exposure. That can create another leg down or an extended consolidation. But the structural picture is more encouraging. Supply is increasingly concentrated in long-term holders, corporates and ETFs. A meaningful portion of coins has already changed hands. And global liquidity, the strongest driver of bitcoin’s long-term cycles, is shifting from contraction toward expansion.

I see this as less of a collapse and more a redistribution. The narrative to follow is not the price alone, but the movement of capital. Bitcoin’s story has never been driven by sentiment. It has always been driven by liquidity.