Analysts Debate Bitcoin’s Future: Is Recovery on the Horizon or a Further Crash Looming?
Bitcoin has recently seen a 24% decline from its peak — what lies ahead? Analysts suggest that BTC is “very close to its local bottom,” but could an unforeseen event prompt a further nosedive?
Macro turmoil shakes Bitcoin
Bitcoin (BTC) has encountered a turbulent journey. After reaching an all-time high of $109,114 in January, coinciding with President Donald Trump’s inauguration and the subsequent pro-crypto stance of his administration, the market has taken a downward spiral.
As of March 13, Bitcoin is trading around $82,600, reflecting a 24% drop from January’s peak, having fallen to a four-month low of $76,600 on March 11.
The market is grappling with multiple challenges. Wall Street is shifting toward a risk-averse stance, fears of a U.S. recession are rising, and new tariff policies under Trump have added to the uncertainty.
Many investors were also disheartened by the absence of new BTC purchases under the Trump administration’s strategic reserve plan, which had instilled hopes for consistent Bitcoin buying.
On the macroeconomic front, inflation data released on March 12 provided a momentary boost. The consumer price index increased by just 0.2% in February, resulting in an annual inflation rate of 2.8% — a decrease from 0.5% in January. The core CPI, which excludes food and energy prices, also dropped to 3.1%, its lowest since April 2021.
The market initially responded positively to this lower CPI data, with Bitcoin edging above $84,000, while altcoins experienced considerable gains. The S&P 500 and Nasdaq 100 also saw modest incr…
However, the optimism proved short-lived. As the day went on, BTC and equities relinquished most of their gains, hindered by the escalating tariff conflict between Trump and major trading allies.
In a decisive action, Trump imposed a 25% tariff on imports of steel and aluminum from Canada, leading Canada to retaliate with similar tariffs on $21 billion worth of U.S. goods.
Shortly after, the EU responded with its own retaliatory tariffs worth $28 billion on U.S. products, further escalating trade tensions.
These developments have left investors anxious, prompting a shift towards a risk-off approach where cash and safer assets like gold and bonds are viewed as more appealing compared to volatile options like Bitcoin.
With these dynamics at play, Bitcoin finds itself at a pivotal juncture. Will it stabilize and prepare for another uptrend, or is a deeper correction looming? Let’s explore further.
Institutional money retreats
Since February 13, spot Bitcoin ETFs have faced significant pressure, with capital exiting at a brisk pace. Although there were brief periods of positive inflows, they were minimal compared to the substantial outflows that characterized most days.
The peak outflow occurred on February 25, with ETFs experiencing their largest single-day outflow ever — exceeding $1 billion, indicative of a clear risk-off sentiment among institutional investors.
Despite these outflows, as of March 12, BlackRock’s IBIT remains the leading ETF, managing nearly 568,000 BTC. Following are Fidelity’s FBTC and Grayscale’s GBTC, operating with 197,500 BTC and 196,000 BTC, respectively.
Add to this a political aspect, as at least six members of Trump’s cabinet own Bitcoin, either directly or indirectly through ETFs.
Among them, Health and Human Services Secretary Robert F. Kennedy Jr. has disclosed the largest stake, with a Bitcoin Fidelity crypto account valued between $1 million and $5 million.
Treasury Secretary Scott Bessent holds between $250,001 and $500,000 in BlackRock’s iShares Bitcoin Trust ETF. Despite his commitment to divest within 90 days, his position underscores the rising links between Bitcoin and high-ranking U.S. policymakers.
Meanwhile, Bitcoin’s open interest, an important metric indicating the total value of outstanding BTC derivative contracts, has been on a downward trend.
After peaking at $70 billion on January 22, following Bitcoin’s new all-time high, open interest has steadily declined. As BTC fell, OI also decreased, reaching a low of $45.7 billion on March 11, the same day BTC hit its four-month low.
However, over the last two days, open interest has begun climbing back, adding over $1 billion by March 13, in tandem with BTC’s price recovery.
The significant ETF outflows and declining open interest suggest institutional reluctance and diminished speculative activity over the past few weeks.
Bitcoin’s surge in January was fueled by strong ETF inflows and high-leveraged positions, but as macro uncertainties and Trump’s trade war intensified, the market adopted a more defensive posture.
The recent increase in open interest may indicate that traders are cautiously re-entering long positions, yet the recovery is slow. A sustained rise in both OI and ETF inflows will be crucial for Bitcoin to regain its momentum.
History hints at a rebound
Bitcoin’s recent retracement from its all-time high has been steep, but historical patterns and technical indicators imply that this could be either a temporary low or the onset of a more profound correction.
Technical analyst CryptoCon notes that Bitcoin has now reverted to historically low RSI Bollinger Band % levels, a territory where BTC seldom lingers for long.
To elaborate, the Relative Strength Index gauges momentum, while Bollinger Bands indicate volatility. When the RSI Bollinger % reaches extreme lows, it signifies that Bitcoin is in an oversold state, suggesting that the downward pressure may be waning.
In prior cycles, instances where BTC touched similar RSI Bollinger % lows heralded a strong local bottom before the subsequent ascent.
According to CryptoCon, Bitcoin has just concluded Phase 4 in the market cycle, where the price surmounts the previous all-time high—something noted in January 2013, December 2016, and November 2020.
In each of these cycles, BTC experienced a correction following the breakout before rallying to a new peak within the subsequent 9 to 12 months.
He believes that the current market cycle displays behaviors reminiscent of March 2017, where BTC underwent a significant correction but eventually recovered and surged further. Should this be the case, it suggests that we may still be several months away from a peak in the cycle.
Nonetheless, this optimistic viewpoint isn’t universally held. Doctor Profit, another acclaimed analyst, outlines two potential scenarios for BTC’s forthcoming trajectory.
https://twitter.com/DrProfitCrypto/status/1900007014165856644
In a typical market situation, BTC’s local bottom is expected to settle between $68,000 and $74,000, as corroborated by the Market Value to Realized Value indicator.
The MVRV indicator assesses whether Bitcoin is overvalued or undervalued by contrasting the existing market price with the average purchase price of all BTC in circulation.
At present, the MVRV suggests that BTC is nearing a robust bottom zone, indicating limited downside risk barring any drastic developments.
This is where the risk of a Black Swan event emerges. Initially, Doctor Profit regarded a Black Swan event as improbable, but recent economic developments — including Trump’s aggressive tariff actions, global trade war apprehensions, and broader recession fears — have made him less certain.
A significant global economic recession, a financial crisis, or a substantial crypto industry downfall could drag Bitcoin much lower, potentially targeting $50,000. While he continues t…s the possibility of a total market collapse.
The indicators present a mixed picture. Bitcoin’s historical cycles imply this is a healthy retreat ahead of another upward movement, yet global circumstances have rarely been this precarious.
For the time being, investors should maintain caution, monitor key support levels, and prepare for increased volatility.
While historical data leans toward recovery, markets do not operate in isolation, and external disruptions can override even the most robust technical indicators. Always invest only what you can afford to lose.
Disclosure: This article does not constitute investment advice. The content and materials presented in this piece are solely for educational purposes.