Bitcoin (BTC) recently experienced a sharp decline, dropping by 9% from its all-time high (ATH) of $99.5K to $90.7K in a matter of days. The sudden price slump, attributed to panic selling by short-term holders (STH), stirred considerable market concern. Analysts, however, are projecting a possible price recovery after the US Thanksgiving holiday, pointing to historical trends as a sign of potential stabilization.

At the time of writing, Bitcoin had rebounded slightly, stabilizing above $93K after a volatile 24 hours. The question remains: what triggered the flash crash on November 26, and can Bitcoin recover?

Panic Selling and Market Reactions

The primary cause of Bitcoin’s recent price drop appears to be panic selling, largely driven by short-term holders. Crypto analyst James Van Straten noted that short-term holders dumped nearly $4 billion worth of Bitcoin between November 25 and 26, which significantly contributed to the downturn. This selloff eclipsed previous large-scale movements, such as August’s carry trade unwind, reflecting the severity of the panic in the market.

The timing of this sharp decline coincided with the US Thanksgiving holiday, a period historically associated with low liquidity and unpredictable price movements. Alex Thorn, Head of Research at Galaxy Digital, pointed out that Bitcoin experienced a similar dip during Thanksgiving in 2020. During that period, Bitcoin fell by 17% between November 25 and 27, only to later surge by more than 300% over the next five months.

Thorn suggested that Bitcoin’s recent 9% drop might mirror that of 2020, and the price could be nearing a local bottom, setting the stage for a potential recovery. “Does history rhyme?” Thorn asked, drawing parallels between the two events.

Historical Precedents and the 2020 Thanksgiving Dip

The 2020 Thanksgiving selloff serves as an important historical reference point. Back then, Bitcoin plummeted sharply, dropping from around $19K to $16K before beginning its dramatic rise. Thorn noted that the “Thanksgiving dump” is not uncommon for Bitcoin, as market participants often take profits during the holiday season or adjust their positions before year-end.

Despite the selloff, Bitcoin went on to see a massive rally in the months following the 2020 Thanksgiving dip, eventually reaching new ATHs in 2021. Given this history, some analysts believe Bitcoin’s current dip could also set the stage for a similar rebound.

Van Straten echoed this sentiment, suggesting that Bitcoin is following a similar pattern to Q4 2020. He emphasized that after significant price drops, Bitcoin often finds support at the Short-Term Holder Realized Price (STH Realized Price), which could offer stability in the current market. Van Straten said, “After the massive flush out during Thanksgiving 2020, Bitcoin went vertical from $10K to $60K, with many pullbacks along the way. The STH Realized Price was a key support level, and it could play a similar role now.”

Will $90.7K Be the Local Bottom?

Despite the optimistic outlook, not all analysts are convinced that $90.7K will be the local bottom for Bitcoin. BTC trader Cryp Nuevo warned that Bitcoin could see further declines, potentially reaching the $85K–$88K range before any potential reversal. “The downtrend could extend a bit further before we see any significant recovery,” Nuevo stated, cautioning that traders should prepare for the possibility of a deeper correction.

While some traders are bracing for further price drops, the consensus in the broader market leans toward a recovery after the US Thanksgiving holiday, in line with historical patterns. Bitcoin’s ability to stabilize above the $90K mark and avoid further panic selling will be crucial in determining whether the cryptocurrency is indeed poised for a rebound or if the downtrend will continue.

Conclusion: What’s Next for Bitcoin?

Bitcoin’s recent decline, largely attributed to short-term holder panic selling, has left many traders wondering whether the cryptocurrency can recover in the near future. While the selloff was sharp and unsettling, the historical precedent suggests that Bitcoin often experiences a strong rebound after significant dips, especially when they coincide with low liquidity periods like Thanksgiving.

Analysts are divided on whether the $90K level will hold as the local bottom, but many are optimistic that Bitcoin could regain its momentum after the holiday season. As Bitcoin stabilizes above $93K, traders and investors will be watching closely to see if the cryptocurrency can maintain support and set the stage for a recovery in the weeks to come.