Bitcoin Faces Major Correction as Strategic Bitcoin Reserve Fails to Boost Price

Bitcoin, the world’s largest cryptocurrency, has extended its decline below the $90,000 mark, with on-chain data showing that whale investors are offloading massive amounts of BTC. This price drop comes despite what should have been bullish news—former U.S. President Donald Trump signing an executive order to establish a Strategic Bitcoin Reserve (SBR). However, rather than providing upward momentum, the order has failed to spark a rally, raising concerns that Bitcoin may be entering an extended bearish phase.

Prominent crypto analyst Doctor Profit has sounded the alarm about an impending major correction in Bitcoin’s price. In a detailed post on social media platform X (formerly Twitter), he outlined why he believes that the current market conditions signal the start of the first major correction of this cycle.

Strategic Bitcoin Reserve: A Misinterpreted Narrative?

Doctor Profit, a well-regarded figure in the crypto analysis space, has announced that he is selling a significant portion of his Bitcoin holdings and entering short positions. His reasoning? The Strategic Bitcoin Reserve, which many retail investors saw as a game-changing development, is not having the expected market impact. Large players and whale investors had already priced in the announcement long before it became public, leading to a sell-off instead of a price rally.

For months, crypto enthusiasts speculated that the U.S. government would accumulate Bitcoin for the reserve, creating strong buying pressure and driving up prices. However, instead of direct purchases from the market, the executive order focuses on utilizing Bitcoin already confiscated from past seizures. This realization has left many bullish investors feeling underwhelmed and caught off guard by the market reaction.

Doctor Profit’s Perspective on the Market Shift

Doctor Profit pointed out that the timing of the policy implementation was unexpected. Initially, he anticipated this move would come much later in the cycle, allowing Bitcoin’s price to continue its bullish trend before experiencing a correction. However, with the announcement happening sooner than expected, he now sees it as a catalyst for a significant downturn.

“Retail traders are celebrating, but institutions and whales have already positioned themselves for what’s coming next. This was the final push before a long-awaited correction,” Doctor Profit stated in his analysis.

Has Bitcoin Reached Its Peak? Analyzing Market Trends

Doctor Profit argues that Bitcoin has yet to experience a meaningful correction in this bull cycle. Historically, every bull market has seen Bitcoin endure at least one major correction, typically between 40% and 50%, before reaching new all-time highs. The analyst believes that Bitcoin’s recent developments are setting the stage for precisely such a downturn.

He has identified key price levels to watch in the coming weeks. If Bitcoin fails to hold support at $85,000, he predicts a sharp decline to $75,000, with further downside potential reaching as low as $55,000 if selling pressure continues to mount.

On-Chain Data Signals Increased Selling Pressure

Whale activity remains one of the most critical indicators of market direction. According to on-chain data, significant amounts of Bitcoin have been flowing from whale wallets to exchanges, signaling an intent to sell. Historically, such moves have preceded sharp declines in price, as institutional investors offload holdings while retail traders remain bullish.

Data from Glassnode reveals that whale entities have reduced their BTC holdings by over 60,000 BTC in the last 30 days alone. This exodus is further exacerbated by declining inflows into Bitcoin ETFs, suggesting that institutional demand is weakening at current price levels.

Why Institutions Are Selling Bitcoin Now

There are several factors contributing to institutional selling:

1. Profit-Taking After a Massive Rally: Bitcoin has surged over 300% from its bear market lows, making it a prime opportunity for early investors to lock in profits.
2. Macroeconomic Concerns: The U.S. Federal Reserve’s stance on interest rates remains uncertain, with inflation concerns keeping risk assets under pressure.
3. Regulatory Uncertainty: While the Strategic Bitcoin Reserve provides some level of government acknowledgment, there remains uncertainty over how Bitcoin and other digital assets will be regulated in the long term.
4. Market Overheating Signs: The crypto Fear and Greed Index has remained in “Extreme Greed” territory for weeks, a historical indicator of potential corrections.

Comparing Bitcoin’s Correction to Previous Cycles

Looking at past bull markets, Bitcoin has never sustained a rally without experiencing significant corrections along the way:

• 2017 Bull Market: Bitcoin hit an all-time high of nearly $20,000 before undergoing multiple corrections of 30-40% throughout the cycle.
• 2021 Bull Market: BTC peaked at $69,000 but faced two sharp corrections—one in May 2021 (-50%) and another in November 2021 (-40%).
• 2024-2025 Cycle: While Bitcoin reached an all-time high above $90,000, it has yet to experience a major shakeout. Analysts believe a 40-50% pullback could be imminent before another rally.

What This Means for Investors

With Bitcoin facing its first major correction of this cycle, investors must approach the market with caution. Here are a few strategies to navigate the potential downturn:

• Avoid FOMO Buying: Chasing prices at these levels could be risky, as Bitcoin may still have significant room to drop.
• Consider Partial Profit-Taking: If holding large positions, it may be wise to lock in some profits in case of further downside.
• Monitor Support Levels: Watch key price levels such as $85,000, $75,000, and $55,000 for potential bounce areas.
• Hedge with Short Positions: Some traders are opening short positions to capitalize on downward momentum, though this comes with inherent risks.

The Long-Term Outlook for Bitcoin

Despite the short-term bearish outlook, Bitcoin’s long-term fundamentals remain strong. Institutional adoption continues to grow, with more companies adding BTC to their balance sheets. Additionally, the 2024 Bitcoin halving has already reduced new supply, historically leading to higher prices over time.

Once the correction phase is complete, Bitcoin could resume its uptrend and target new all-time highs. Some analysts, including those from leading financial institutions, still believe BTC could hit $150,000-$200,000 by the end of 2025.

Final Thoughts

The market reaction to Trump’s Strategic Bitcoin Reserve order highlights a crucial lesson in crypto investing—news alone is not enough to sustain a rally. With whale investors selling off their holdings and market sentiment shifting, Bitcoin appears poised for a significant correction.

While this might alarm some investors, seasoned traders recognize corrections as healthy parts of any bull cycle. Whether Bitcoin drops 40% before continuing its ascent remains to be seen, but one thing is certain—the next few weeks will be critical in determining the cryptocurrency’s trajectory.