Bitcoin Plummets 22% Amid 2018 Crash Fears

Bitcoin has experienced a significant decline of 22% from its all-time high of $109,000, drawing comparisons to past bull cycle corrections. This drop has raised questions about whether the current market conditions mirror those of the 2018 crypto crash, when Bitcoin saw a 72% yearly decline, bottoming at $3,740.50.

In 2018, macroeconomic conditions were marked by a trade war with China and escalating tariffs, which led to a spike in inflation to a two-year high of 2.9%. This economic turmoil resulted in a 40% quarterly decline for Bitcoin, which had surged to $9,826 in April. The current market faces similar macro pressures, with $7 trillion in debt refinancing ahead and investors shifting capital into safe-haven assets like bonds. The 10-year treasury yield has dropped to a two-month low, indicating that the bond market is absorbing liquidity and pulling capital away from risk assets.

If this trend continues, Bitcoin and the broader crypto markets could face heightened downside risk, increasing the probability of a 2018-style crash. On-chain indicators also signal potential risks. According to Glassnode’s latest report, Bitcoin’s market structure has shifted from accumulation to distribution, with the Accumulation Trend Score remaining close to 0.1, reflecting consistent sell pressure since January. The Cost Basis Distribution (CBD) heatmap shows a decline in “buy-the-dip” activity below $92K, indicating reduced demand for accumulation.

Short-Term Holders (STHs) are exhibiting signs of capitulation, with the STH Spent Output Profit Ratio (STH-SOPR) staying below 1, suggesting that many investors are selling at a loss. This pattern closely resembles August 2024, when Bitcoin plummeted to $49K under intense selling pressure. At present, accumulation remains weak at critical demand zones, despite Bitcoin trading 22% below its all-time high of $109K. This reflects a clear risk-off sentiment, with buyers showing reluctance to enter the market.

Coupled with prevailing macroeconomic challenges, the current scenario increasingly mirrors the 2018 crash, where extended distribution led to prolonged downward movements. As a result, Bitcoin faces an elevated risk of further corrections before establishing a strong support level. The combination of macroeconomic pressures and on-chain indicators suggests that traders should remain cautious, as the market may be on the brink of a significant downturn similar to the 2018 crypto crash.