Bitcoin dropped to a four-month low of $76,700 on March 11, following a 6% weekly decline in the S&P 500 index.

The stock market correction pushed the index to its lowest level in six months as investors priced in higher odds of a global economic downturn.

Despite Bitcoin's 30% drop from its all-time high of $109,350, four key indicators suggest that the correction may be over.

Bitcoin bear market needs 40% drop, strong USD

Some analysts argue that Bitcoin has entered a bear market. However, the current price action differs significantly from the November 2021 crash, which started with a 41% drop from $69,000 to $40,560 in just 60 days.

A comparable scenario today would imply a decline to $64,400 by the end of March.

Bitcoin/USD in Nov. 2021 vs. Feb. 2025. Source: TradingView / Cointelegraph

The current correction mirrors the 31.5% drop from $71,940 on June 7, 2024, to $49,220 over 60 days.

Additionally, during the late 2021 bear market, the US dollar was strengthening against a basket of foreign currencies, as reflected in the DXY index, which surged from 92.4 in September 2021 to 96.0 by December 2021.

DXY (left, blue) vs. BTC/USD (right). Nov. 2021 vs. Feb. 2025. Source: TradingView / Cointelegraph

This time, however, the DXY started 2025 at 109.2 and has since declined to 104. Traders argue that Bitcoin maintains an inverse correlation with the DXY index, as it is primarily viewed as a risk-on asset rather than a safe-haven hedge against dollar weakness.

Overall, current market conditions show no signs of investors moving to cash positions, which supports Bitcoin’s price.

BTC derivatives healthy as investors fear AI bubble

The Bitcoin derivatives market remains stable, as the current annualized premium on futures stands at 4.5%, despite a 19% price drop between March 2 and 11.

For comparison, on June 18, 2022, this indicator fell below 0% after a sharp 44% decline from $31,350 to $17,585 in just 12 days.

Bitcoin 2-month futures annualized premium. Source: laevitas.ch

Similarly, the Bitcoin perpetual futures funding rate is hovering near zero, signaling balanced leverage demand between longs and shorts. Bearish market conditions typically drive excessive demand for short positions, pushing the funding rate below zero.

Several publicly traded companies with market values exceeding $150 billion have seen sharp declines from their all-time highs, including Tesla (-54%), Palantir (-40%), Nvidia (-34%), Blackstone (-32%), Broadcom (-29%), TSM (-26%), and ServiceNow (-25%). Investor sentiment, especially in the artificial intelligence sector, has turned bearish amid growing recession fears.

Traders are concerned about a potential US government shutdown on March 15, as lawmakers must pass a bill to raise the debt ceiling. However, according to Yahoo Finance, the Republican party remains divided.

The key points of contention in House Speaker Mike Johnson’s proposal are increased spending on defense and immigration.

Risk-on markets, including Bitcoin, are likely to react positively if an agreement is reached.

Real estate crisis is not necessarily negative

Early signs of a real estate crisis could accelerate capital outflows into other scarce assets. According to Feb. 27 data from the US National Association of Realtors, home contract signings fell to an all-time low in January.

Additionally, a Feb. 23 opinion piece in The Wall Street Journal revealed that over 7% of Federal Housing Administration-insured loans are at least 90 days past due, surpassing the peak of the 2008 subprime crisis.

In essence, Bitcoin's path to reclaiming $90,000 is supported by a weaker US dollar, historical evidence that a 30% price correction does not signal a bear market, resilience in BTC derivatives markets, contagion from government shutdown risks, and early signs of a real estate crisis.