Asset management giant VanEck, which manages $32 billion, has described Bitcoin's recent price drop as a "liquidity-driven mid-cycle correction" in its Bitcoin ChainCheck report published in mid-October. According to the firm, strong fundamentals, increasing adoption rates, and on-chain data indicate that the Bitcoin market is maturing.
VanEck's report, authored by analysts Nathan Frankovitz and Matthew Sigel, stated that Bitcoin's October pullback is a 'mid-cycle reset' driven by tightening global liquidity conditions. They noted that leverage ratios are returning to normal, on-chain activity is increasing, and the macroeconomic role of digital assets continues to strengthen.
Key findings from the report reveal that global M2 money supply growth explains more than half of Bitcoin's price movements, reinforcing its narrative as a hedge against money printing. Data from MacroMicro shows the global M2 supply has grown by 6.8% since the start of the year, indicating ongoing monetary expansion. Additionally, nearly 73% of Bitcoin's price variance since October 2020 can be attributed to changes in futures open interest, which peaked at $52 billion in early October, leading to liquidations that caused Bitcoin to lose approximately 18% of its value.
Bitcoin reached an all-time high of $125,000 on October 6 before falling to $105,000 on October 10, with the 30-day average price up 2% month-over-month. VanEck attributed the decline to US-China trade tensions, high leverage levels, and profit-taking by large investors. The firm emphasized that with leverage now at the 61st percentile and Bitcoin prices near one-year lows relative to gold, this aligns with a mid-cycle correction rather than a bear market onset.
VanEck concluded that it is not willing to bet against Bitcoin while fiat money debasement accelerates, and argued that owning less than approximately 2% Bitcoin is implicitly expressing a short position, given Bitcoin represents about 2% of the global money supply.
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