Bitcoin has been a cornerstone of the cryptocurrency market, but recent movements are raising some concerns. The 1-year percentage change of Bitcoin is nearing the negative zone, a signal that has historically been associated with bearish trends in the market. While three out of the last four instances of such a dip led to declines, there is a chance that this time could mirror the 2020 market behavior, where the negative shift marked a broader consolidation phase.

Understanding the 1-Year Percentage Change

The 1-year percentage change of Bitcoin tracks its price difference over a 12-month rolling period, offering insights into the overall market sentiment. When this metric enters the negative zone, it indicates that Bitcoin’s price is lower than it was a year ago. Historically, this shift has been linked to bearish momentum, signaling either a decrease in buying interest or an increase in selling pressure.

When Bitcoin’s 1-year percentage change dips into the negative zone, it raises the concern of a potential downturn. This drop typically suggests that there is less enthusiasm in the market, as investors may be selling off their holdings, creating downward pressure on the price.

Historical Context: What Does the Data Say?

Looking at past occurrences, Bitcoin’s 1-year percentage change has dipped below zero four key times, with varying outcomes:

1. 2015: The first instance occurred during a brief recovery from the 2014 bear market. While the metric dropped into the negative zone, it did not lead to significant further declines, as Bitcoin was in the midst of recovering.

2. 2018-2019: The longest negative phase occurred after Bitcoin’s price fell from $20,000 to around $3,200. This marked one of the most severe downturns in Bitcoin’s history, as the market entered a prolonged bear phase.

3. 2020: A short negative period occurred amid the COVID-19 market disruptions. This led to an eventual consolidation phase and a major bullish breakout as Bitcoin regained momentum.

4. 2022: Following a massive drop from $69,000 to below $20,000, Bitcoin entered the negative zone once again, signaling a period of market stress and caution.

Now, in March 2025, Bitcoin’s 1-year percentage change is approaching zero, suggesting the possibility of entering the negative zone once more. Analysts remain divided on whether this signals a consolidation phase similar to 2020 or the beginning of a new bearish cycle.

The Case for Consolidation

One of the more optimistic views is that the negative shift could signal a period of consolidation, much like what occurred in 2020. In 2020, Bitcoin’s 1-year percentage change turned negative, but it didn’t lead to a prolonged downturn. Instead, it signaled a period of price stabilization before the market broke out bullishly.

If history repeats itself, Bitcoin may experience short-term stagnation before resuming its upward trajectory. This could mean that the market is merely catching its breath before the next major rally. During this consolidation phase, volatility may decrease, and the market could stabilize, providing an opportunity for new investors to enter at lower prices before the next upward move.

Risks of Sustained Negative Movement

While consolidation offers hope, there is also a risk that Bitcoin could enter a sustained negative phase. If the 1-year percentage change continues to decline, it could lead to a more prolonged downturn. Previous instances of prolonged negative movement have been followed by deep bear cycles, suggesting that Bitcoin’s rally could stall.

External factors, such as broader market conditions or regulatory uncertainty, could exacerbate this downturn. If Bitcoin’s price continues to weaken, it could trigger panic selling, causing a deeper price drop and further eroding investor confidence.

Conclusion: Caution and Patience Are Key

While Bitcoin’s 1-year percentage change approaching the negative zone is a cause for concern, it does not necessarily spell doom. The situation could mirror 2020’s consolidation phase, which eventually led to a major breakout. However, traders should be aware of the risks associated with sustained negative movement, as this could indicate the start of a prolonged bearish cycle.

In the current environment, patience and caution are key. Investors should keep a close eye on the market, watch for signs of recovery, and be prepared for short-term volatility. As always, it is crucial to manage risk and remain mindful of the broader market context when making investment decisions.