Bitcoin (BTC) is pulling back from its October highs, and the scale of the selloff is raising some eyebrows. We're already looking at a decline of more than 30%, which feels particularly striking given that the Fed has been cutting rates for months now. Market expectations for another rate cut in December are climbing again, yet Bitcoin keeps sliding.

Here's the thing about cryptocurrencies: they're incredibly sensitive to risk-on and risk-off sentiment. Stocks have experienced a meaningful pullback too, but what's particularly concerning is that even on days when equities bounced back into positive territory, Bitcoin continued trading lower. That divergence is worth paying attention to.

Taking a step back to look at the monthly chart reveals some interesting patterns. Each bull phase in Bitcoin's history has lasted roughly 36 months, give or take. This current cycle also completed right around October, which is exactly when this notable reversal began. From a cycle perspective, corrections typically run for about 12 months, and based on that historical rhythm, it appears we might be witnessing the early stages of a higher-degree correction rather than approaching its conclusion.

From an Elliott Wave analysis standpoint, this looks like a higher-degree wave four correction unfolding. The significant support level appears around $60,000, which would represent an ideal zone for a potential rebound into the next bull phase. And if the historical pattern holds, that next bull phase is still roughly a year away.

Beyond technical patterns, sentiment indicators are equally revealing. Exchange outflows have spiked considerably in recent weeks, meaning substantial amounts of Bitcoin have been transferred to private and cold wallets. The majority of investors clearly want to hold their positions because they believe prices will rise from here. While the long-term bullish case remains intact, markets rarely make it that easy for the majority to profit without additional pain first. That's simply not how this works.

Sentiment extremes typically drive major turning points in any market. Current outflow readings don't suggest extreme pessimism at all. Instead, it looks like everyone is trying to buy the dip, which is understandable but not characteristic of how major bottoms typically form. Major lows usually arrive when despair peaks and nobody wants to touch the asset.

Could we see a rally from current levels? Absolutely. But there's a reasonable case that another deeper leg down could follow afterward. Both cycle analysis and price structure suggest Bitcoin may only be halfway through this correction before finding a more durable bottom. The long-term outlook remains bullish, but expecting this correction to wrap up quickly might be overly optimistic given the evidence at hand.