Bitcoin is at a crossroads: bear market or new highs? Where is the market going?

As of March 13, 2025, Bitcoin (BTC) has fallen 3% in the past 24 hours, with the current price at $81,148, and Bitcoin's market capitalization share (BTC.D) has fallen back to 61.68%. Market sentiment is low, centralized exchange trading volume shrank 21% to $7.2 trillion last month, and Wall Street is uneasy about the "Trump sell-off." At the same time, technical indicators show an "oversold" state, the derivatives market remains resilient, and Bitcoin ETF fund flows show signs of recovery. In this complex situation, is Bitcoin in a normal adjustment within the bull market cycle, or is it sliding into a deeper bear market? Based on the latest data and multiple views, this article will systematically analyze the current market and look forward to future trends from three dimensions: short-term shocks, potential risks, and long-term opportunities.

1. Short-term shocks: the logic and support of bull market adjustments

Normal callbacks in bull market cycles

Bitfinex analysts pointed out that price adjustments within the bull market cycle are typical phenomena, and the current decline may only be a temporary shock, rather than the beginning of a long-term bear market. They emphasized that the trend of Bitcoin is closely related to the broader financial market, especially the performance of stock and bond yields. If global liquidity conditions ease and institutional capital inflows continue, the support level of $72,000-75,000 may become the cornerstone of the rebound. On March 12, the net inflow of Bitcoin ETFs broke the outflow trend for five consecutive days, among which ARK Invest's ETF performed particularly strongly, indicating that institutional demand has not subsided due to short-term fluctuations. Analysts believe that this may be a signal that fund managers are re-adjusting their positions for the Fed's policy shift to dovish.

Cointelegraph quoted the views of analyst Marcel Pechman to further support this judgment. He believes that due to the stability of the derivatives market, the weakness of the US dollar and the US budget crisis, Bitcoin's correction may be nearing its end. On March 11, Bitcoin fell to a four-month low of $76,700. During the same period, the S&P 500 fell 6% in a week, and investors' concerns about a global recession intensified. However, compared with the bear market crash at the end of 2021 (a 60-day drop from $69,000 to $40,560), this adjustment is closer to the mid-term correction in June 2024 (a 31.5% drop from $71,940 to $49,220). A 30% correction is not uncommon in Bitcoin history and has not triggered a systemic panic. Technical indicators and the resilience of the derivatives market Technical analysis shows positive signals. CryptoQuant analysts said that the market has entered the "oversold" range, and the selling pressure has been fully released, which may provide favorable conditions for an increase even without further sharp declines. In addition, the Bitcoin derivatives market has shown resilience. Pechman noted that despite the price drop, the annualized premium of futures remains at 4.5%, well above the sub-0% level after the June 2022 crash. The near-zero funding rate for perpetual futures indicates a balance of long and short leverage demand, without the short-term dominance common in bear markets. This is in stark contrast to the scenario at the end of 2021, when a stronger dollar (DXY rose from 92.4 to 96.0) was accompanied by a shift to cash positions by investors, while the current DXY has fallen back to 104 from 109.2 at the beginning of the year, weakening the safe-haven appeal.

Second, potential risks: macro pressure and extreme scenarios

Macroeconomic uncertainty

Although short-term indicators are optimistic, macroeconomic uncertainty casts a shadow on the market. Ed Yardeni, president of Yardeni Research, the Wall Street "bulls" who once predicted that the S&P 500 index would reach 7,000 points, has recently turned cautious. He warned that "the bear market may have quietly begun" and pointed out that "Trump Tariff 2.0" could trigger a flash crash similar to that of 1962 or 1987. Mars Finance also reported that Wall Street was uneasy because of the "Trump sell-off", and the "buy on dips" strategy that dominated the market in the past 20 years was replaced by "locking profits" and "wait and see". Dave Maza, CEO of Roundhill Investments, described the current purchase as "buying discounted tickets for unknown performances", which is full of high risks and uncertainties.

Ted Mortensen, managing director of Robert W Baird & Co., said that the market has entered a "capital preservation mode", especially in the technology and encryption fields, which are facing cyclical headwinds common in spring. The trading volume of centralized exchanges fell 21% to $7.2 trillion, further reflecting liquidity pressure. If the global economic recession expectations are fulfilled or the trade war escalates, the crypto market may face greater shocks.

Risk of failure of key support levels

Although CryptoQuant sees "oversold" as a buying opportunity, technical rebounds may be suppressed if investor sentiment turns to extreme panic. Historical data shows that panic selling is often accompanied by liquidity crises and confidence collapse. If Bitcoin falls below $74,000 and triggers a chain reaction, short-term fluctuations may evolve into a longer bear market. Bitfinex's optimistic forecast relies on improved global liquidity, but if this premise is not realized, the risks will be significantly amplified.

Eugene Ng Ah Sio proposed a more specific downside scenario from a technical perspective. He predicts that if MicroStrategy sells off on a large scale, Bitcoin could fall to $52,000 or even $25,000, a drop of 36% and 70%, respectively. For Solana (SOL), he believes that $80 is a key support level, and if it falls below, it may drop to $25, a drop of more than 80%. Although these extreme bottoms are low-probability, they are not impossible under macro deterioration (such as institutional capital withdrawal or liquidity depletion). The assumption of $25,000 is shocking, but it is still within a reasonable range compared to the 2022 bear market low of $16,000.

The Misunderstanding of BTC.D and the Impact of ETH

BTC.D (Bitcoin's market capitalization share) is often misinterpreted as a market vane. Currently, BTC.D has fallen back to 61.68%, and some people are looking forward to the start of the "altcoin season". However, the decline of BTC.D is often the result of "slowing BTC growth + rising altcoins" rather than the cause. Its trend is largely driven by Ethereum (ETH) and is highly correlated with the ETH/BTC exchange rate. Eugene has removed ETH from his portfolio, showing caution about ETH's short-term prospects, which may further drag down BTC.D, but may not necessarily indicate a prosperity for altcoins. If investors rely solely on BTC.D to judge trends, they may ignore the dominant role of ETH and the real dynamics of the market.

III. Long-term opportunities: policy shift and market potential

U.S. policy shift: from regulatory hostility to strategic reserves

The U.S. government’s attitude towards digital assets is undergoing a historic shift, injecting new momentum into Bitcoin’s long-term prospects. On March 7, President Trump signed an executive order to formally establish the “Strategic Bitcoin Reserve” and the “Digital Asset Stockpile,” marking the first time that the United States has considered Bitcoin as a strategic asset, analogous to traditional reserves such as gold. White House officials call it the "Fort Knox of the digital age," emphasizing the scarcity and security of Bitcoin, arguing that its fixed supply (21 million) gives it strategic value. The executive order stipulates that the Bitcoin in the reserve will come from criminal and civil forfeiture assets and cannot be sold, and is intended to be a long-term store of value. This policy reverses the regulatory hostility toward the crypto industry during the Biden administration and reflects Trump's determination to fulfill his campaign promise - he once promised to make the United States a "crypto capital."

On March 11, Senator Cynthia Lummis (R-Wyoming) reintroduced the BITCOIN Act, proposing that the US government purchase 1 million Bitcoins (about $80 billion at current prices) over the next five years and write Trump's Bitcoin reserve plan into law. The bill will also be funded through the net proceeds of the Federal Reserve and the issuance of new gold certificates (based on current market prices) by the Treasury Department. Lummis said the bill aims to "harness the full potential of digital innovation and address the national debt while maintaining a competitive advantage in the global economy." This legislative move suggests that the United States may further expand its Bitcoin holdings and consolidate its leading position in the global digital asset race.

Macro liquidity easing: potential catalyst for global central banks

Improvements in macro liquidity may be another major driver of Bitcoin's long-term rise. Arthur Hayes posted on the X platform that the current market adjustment is a normal phenomenon in the bull market. He predicted that Bitcoin may bottom out around $70,000, a 36% drop from its all-time high of $110,000, which is not uncommon in bull market cycles. He further pointed out that the stock market (especially the S&P 500 SPX and the Nasdaq NDX) may enter a "free fall" phase, triggering a further slowdown in the global economy. However, this pressure may prompt major central banks to take action. Hayes expects the Federal Reserve, the European Central Bank, and the Bank of Japan to introduce easing policies one after another to stimulate their respective economic recoveries.

Hayes' analysis provides a macro perspective on the long-term potential of Bitcoin. The implementation of easing policies usually means interest rate cuts, asset purchases, or quantitative easing, which will increase market liquidity and reduce risk-free interest rates, thereby pushing up the prices of risky assets. As an anti-inflation asset, Bitcoin tends to perform strongly in an environment of loose liquidity. For example, the Federal Reserve's ultra-loose policy in 2020-2021 pushed Bitcoin from $10,000 to an all-time high of $69,000. Hayes recommends that investors "enter the market in a big way" at this stage, although they may miss the absolute bottom, but they can avoid long-term shocks and potential unrealized losses. For more cautious investors, he recommends waiting for the easing policies of major central banks to be implemented before increasing capital investment to reduce risks.

Institutionalization is accelerating: the integration of banks and blockchain

The US policy shift is not limited to government reserves, but may also promote a broader institutionalization process. On March 12, Forbes published an article stating that digital assets have moved from the edge of the financial system to the core, and traditional banks are increasingly interested in the crypto market. The article suggests that US banks should be allowed to hold mature digital assets such as Bitcoin and Ethereum, and manage risks through diversification, hedging strategies and strict exposure restrictions. Banks have already coped with volatility in the foreign exchange and commodity markets, and similar tools are fully applicable to crypto assets. In addition, blockchain technology can optimize cross-border payments, reduce transaction costs, and drive financial institutions towards true 24/7 operations. This modernization potential may attract more banks to enter the market, further enhancing the market legitimacy and liquidity of Bitcoin.

The first crypto summit held by the White House on March 7 also sent a positive signal. At the summit, Trump expressed support for Congress to pass legislation on stablecoins and the crypto market, calling it "a huge opportunity for economic growth and financial innovation." Participants included industry leaders such as Michael Saylor of MicroStrategy and Brian Armstrong of Coinbase, showing the government's willingness to cooperate with the crypto industry. Coinbase CEO Brian Armstrong said, "The U.S. government is now a holder of Bitcoin, and may even be a buyer, which will prompt other G20 countries to regard Bitcoin as the successor to the gold standard." This trend may trigger a "Bitcoin reserve competition" around the world, further pushing up its long-term value.

Fourth, Conclusion and Investment Recommendations

For investors, the current situation is both a challenge and an opportunity. Before the trend is clear, it is wiser to remain flexible than blindly buying or selling at the bottom. Short-term traders can focus on the gains and losses of the $74,000-76,000 support level, and judge the timing of the rebound by combining the ETF fund flow and DXY trend. Long-term investors should focus on policy trends and institutional behavior to avoid being disturbed by short-term fluctuations. As Ed Yardeni said, the bear market may come quietly, but Bitfinex's confidence and the resilience of the derivatives market are also reminding us that the bull market story may be far from over.

The next step of Bitcoin depends on the direction of the global economic chess game. At the crossroads of decline and hope, caution and patience may be the best choice at the moment.