Emre Yumlu 
Investment management firm VanEck has shared its latest insights on Bitcoin sharp October decline, describing the move as a “liquidity-driven mid-cycle correction.” In a recent market report, analysts Nathan Frankovitz and Matthew Sigel explained that “leverage levels have normalized, on-chain activity is picking up, and the macro role of digital assets continues to strengthen.”
Currently, Bitcoin is trading about 14% below its all-time high, struggling to recover after the major leverage flush that occurred earlier this month.
A Healthy Correction, Not a Bear Market
According to VanEck, Bitcoin’s latest pullback is part of a natural market cycle rather than the start of a prolonged downturn. The firm noted that leverage levels sit around the 61st percentile of historical averages, while Bitcoin remains at one-year lows relative to gold, indicating that excessive bearish sentiment has not yet taken hold.
VanEck’s report highlighted that global M2 money supply growth explains more than half of Bitcoin’s price variance. Data from MacroMicro shows that global M2 has expanded by 6.8% since the start of the year, as central banks continue to inject liquidity into the economy. The analysts added that global liquidity, leverage dynamics, and on-chain activity remain key drivers of Bitcoin’s price action.
Furthermore, since October 2020, nearly 73% of Bitcoin’s price movements have been linked to changes in futures open interest, while strong correlations between blockchain revenues and token prices continue to signal real network adoption.
VanEck: Betting Against Bitcoin Is Risky
VanEck emphasized that shorting Bitcoin amid rapid fiat currency debasement carries significant risk.
“With Bitcoin now accounting for roughly 2% of global money supply, we believe digital assets will play an increasingly vital role in diversified portfolios,” the report stated. “Holding less than 2% of Bitcoin or other digital assets effectively represents a short position against the asset class.”
Volatility Persists Despite Bullish Outlook
Several market strategists agree that the bull market remains intact, though heightened volatility is likely in the short term. Investor Ted Pillows noted that U.S. Treasury Secretary Scott Bessent expects lower inflation next month, meaning that the upcoming Consumer Price Index (CPI) report could underperform market expectations.
“High inflation tends to pressure crypto assets by fueling tighter monetary policy expectations. However, if CPI data comes in lower than anticipated, the crypto market could stage a strong rebound,” he said.
Echoing the sentiment, MN Fund founder Michaël van de Poppe added, “Markets will likely remain choppy until the next major macro event — CPI. That data will determine Bitcoin’s direction and shape the Fed’s next policy decisions.”
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