Bitcoin’s Early-Year Pattern is Breaking: What History Actually Says

With February now half way through, Bitcoin is on the verge of printing an unfavourable entry in its history book. This is the first year in Bitcoin’s history where both January and February so far are in the red. In order for Bitcoin to avoid this scenario, a monthly close above $78.6K. 

However, with momentum turning toward the downside over the past four weeks, the growing likelihood of this pattern breaking is raising serious questions about whether this is a regime shift or just a temporary anomaly. 

Q1 has so far been unforgiving for the largest and oldest crypto asset. From the start of the year to today, price has fallen roughly -22%, marking the weakest start to a year since 2018. February in particular has carried the bulk of the drawdown, with Bitcoin down 12.75% for the month. This makes it the third-largest February decline in Bitcoin’s history. The picture looks bleak on the surface as this adds to the idea that something is structurally broken in Bitcoin’s price action. 

However, zooming into seasonality trends alone misses the bigger picture. Throughout Bitcoin’s history, sharp drawdowns of over -75% post all time highs are common. Currently, even though sentiment might’ve reached an all time low and on-chain flashing signs of pain, Bitcoin sits at around a 45% correction. The important question here becomes what forces are driving the current sell off and whether this correction still fits within the range of typical post ATH corrections, both in terms of cycle duration and on-chain behaviour.  

How Rare is a Red January and February? 

The fact is Bitcoin has never registered two monthly red candles at the start of the year. The closest it got to printing such a pattern was back in 2018 which ultimately went on to become a prolonged bear market until December of that year when BTC bottomed at around $3100. 

What’s different and interesting this time around is where we sit in the post ATH timeline. Bitcoin is already roughly four months into a correction since posting the ATH in October, meaning this rare early-year weakness is appearing after an already ongoing correction. In contrast, the 2018 decline had only begun following the December 2017 peak. 

This distinction is important because historically, weak starts to the year have often appeared during late-cycle unwinds or during the transition into a longer bear phase. The current scenario, however, is noticeably different and hence sits in an ambiguous middle ground. Early-year weakness is emerging after several months of prior downside, raising the key question of whether the market is still progressing through a typical post-ATH correction or already moving closer to the later stages of a bottoming out phase. 

February’s Historical Strength Explained 

A reason for why this pattern is historically very rare is that February is usually a bullish month for Bitcoin for a myriad of reasons. The answer lies less in simple seasonality and more in a mix of positioning resets, liquidity cycles and, more recently, institutional flows. 

One of the most influential factors is the post-January positioning reset. January often acts as a month for rebalancing portfolios and tax-driven selling, especially after a bullish quarter four. This tends to front run volatility and profit taking in the first few weeks of the year and February usually becomes the period where selling pressure reduces and risk appetite gradually returns. 

Another factor that often comes into play is the Chinese New Year Liquidity cycle. Historically, liquidity conditions in Asia tighten ahead of the holiday period and begin to normalize afterward. As trading activity resumes and capital flows return to risk assets, Bitcoin has frequently benefited from improved demand during February and early March. While this effect is difficult to quantify precisely, the pattern has appeared consistently enough to become a widely observed seasonal tailwind.  

The modern market structure with institutional adoptions add another new layer to this dynamic. With the arrival of spot Bitcoin ETFs in January 2024, early-year performance has increasingly been influenced by institutional allocation cycles. Q1 of 2024 saw approximately $12.13 billion in net inflows, followed by $922.09 million in Q1 2025. This year, however, the trend has sharply reversed. The market has already recorded roughly $2.28 billion in net outflows this quarter, coming after significant withdrawals in November and December. This shift in ETF flow dynamics represents a major departure from the supportive early-year demand that helped underpin prior February strength.

That said ETF flows are only one part of the story. To understand why there’s been such a decline, we need to consider the confluence of headwinds weighing on the market. 

When Seasonality Breaks, Macro Usually Dominates 

Seasonality tends to work best when the macro backdrop is neutral or supportive. Currently this is not the case. Elevated interest rates, uncertainty around inflation and tighter financial conditions have investors opting toward safer, yield-bearing assets. Bitcoin has entered a maturation phase where it is increasingly interconnected with traditional markets, and while this is favourable for accessibility and adoption, it also comes with the asset class now moving in line with risk sentiment. 

This overall macro environment has had a visible impact on market behaviour. Liquidity has tightened, leverage has unwound and realised losses have shot up since the end of January as weaker hands continue to exit positions and add sell side pressure. Therefore, this weak start to the year is much more than a simple seasonal deviation but part of a broader risk-off environment caused by macro uncertainties. 

Is this a Bear Continuation Signal? 

A weak first quarter for Bitcoin, however, does not definitively signal a continuation of bearish price throughout the year. For example, in 2020, BTC printed a -10.83% Q1 and then went on to rally close to 240% until year end. Similarly, in 2015 and 2016, BTC started with a weak Q1 and ended the year in the green. 

That said, it’s important to understand that Bitcoin bottoms are a process and not an event. In other words reaching a cycle bottom can take time to play out. From a pure timeline perspective, Bitcoin is so far following the four-year cycle to a T. 

When we look at the prior two cycles, it took Bitcoin approximately 1060 days to hit a new all time high from cycle lows. In the latest cycle, this was 1050 days, showing a strong alignment playing out. Now if we invert this and examine the time from cycle highs to lows, the last two cycles reached a bottom almost around 370 days from previous all time highs. If we were to extrapolate that data, that would point to a potential bottom in October of this year. 

This is not to say that this has to play out again, but the cyclical nature of Bitcoin suggests it is broadly following its usual course, and it would be unwise to ignore it. On-chain signals such as the share of holder supply in profit versus loss, are also reaching levels only seen during bear market lows. That said, it’s important to note that the crossover between these two cohorts takes time to develop and form a base, but nevertheless still signals an opportunistic period for accumulation. 

Ultimately, how quickly a bottom forms will depend on macro conditions and whether an easing of uncertainty can drive fresh demand and a return to sustained ETF inflows.