Bitcoin parabola support broken: Will the 80% correction make a comeback?

Increasing macro pressures create conditions for decline

The Bitcoin market is currently facing a macro storm. Data from Polymarket shows that the probability of the Bank of Japan (BOJ) raising interest rates has risen to 97%, with a projected increase of 0.25% on December 19. History has shown that each time the BOJ tightens monetary policy, risky assets like Bitcoin come under strong pressure.

Specifically, Bitcoin has experienced three significant declines when the BOJ raised interest rates:

• March 2024: down 27%
• July 2024: down 30%
• January 2025: down 30%

When interest rates rise, carry trade transactions are liquidated, global liquidity tightens, and leveraged positions are forced to close. Bitcoin is currently at $90.64K, down 0.26% in the past 24 hours.

Parabolic demand broken: Warning signals from Peter Brandt

Veteran trader Peter Brandt has made a notable observation: Bitcoin’s parabolic demand has been breached. This is not a new signal in Bitcoin’s history but a recurring pattern across multiple bull cycles.

According to Brandt, Bitcoin’s price rallies have followed a parabolic trajectory with increasingly lower peaks. Each time the parabolic demand is broken, the market enters a prolonged correction phase. In previous cycles, these declines often reached below 80% from the cycle’s peak, which, while severe, could still be forecasted.

Currently, Bitcoin has fallen about 20% from its all-time high (ATH: $126.08K). If history repeats itself in the worst-case scenario, an 80% correction could push Bitcoin’s price down to around $25,000 in the coming months.

But is this cycle different?

While warnings from analysts are valid, Bitcoin’s demand structure has changed significantly since 2022. This is an important difference from previous cycles.

Data from Glassnode shows that corporate Bitcoin reserves have increased from 197,000 BTC in January 2023 to over 1.08 million BTC today – a 448% increase. This figure reflects Bitcoin’s shift from a speculative asset to a strategic asset on the balance sheets of major companies.

Additionally, the supply held by long-term investors remains high, and the emergence of spot ETF products has brought stable capital flows from institutional funds. These structural demand changes mean that although downside risks still exist, future declines may be milder and better absorbed than in past market downturns.

In summary, while the breach of parabolic demand is a serious warning sign, the depth of today’s Bitcoin market may help soften the impact of larger corrections seen in the past.