Bitcoin's price has dropped 22% from its record high of $109,000 on Jan. 20, 2025, the day of Donald Trump's inauguration. Despite this decline, analysts suggest the current downturn is likely a temporary shakeout rather than the end of Bitcoin's bull market cycle. Bitcoin's price is recovering, and technical indicators show that while there is some bearish movement, this correction is typical for the cryptocurrency's market cycle.
According to Bitfinex analysts, Bitcoin’s four-year cycle remains an essential factor in understanding its price fluctuations. They explain that pullbacks during bull market cycles are not unusual, and this drop may simply be a brief shakeout, which often precedes a rebound. Even though several technical indicators have turned bearish, historical trends show that Bitcoin tends to recover after such declines. Analysts also noted that the market’s correlation with traditional financial markets, especially the S&P 500, suggests Bitcoin could find a bottom alongside stock market movements. They highlighted the $72,000 to $73,000 range as a key support level for Bitcoin’s price.
Iliya Kalchev, a dispatch analyst at Nexo, further reinforced the view that Bitcoin's halving events remain crucial for long-term price trends. He acknowledged that Bitcoin’s compound annual growth rate (CAGR) has dropped to a historical low of 8%, raising questions about the effectiveness of the four-year cycle. However, he believes that the halving event, which reduces the Bitcoin network’s block reward to 3.125 BTC, still plays a significant role in the cryptocurrency's price action. Since the last halving in April 2024, Bitcoin’s price has increased by over 31%.
The launch of Bitcoin exchange-traded funds (ETFs) has also played a part in supporting Bitcoin’s market performance. With cumulative holdings exceeding $125 billion at their peak, these ETFs reflect the growing institutional adoption of Bitcoin. This institutional interest, coupled with the halving, provides a strong foundation for future price movements, despite the current volatility.
Bitcoin's market behavior continues to be influenced by broader economic conditions, including global treasury yields and stock market trends. Analysts warn that prolonged economic strain and trade wars could negatively impact investor sentiment, despite some risks already being priced in.
Despite the current downturn, many remain optimistic about Bitcoin’s future. While short-term corrections are expected, Bitcoin's historical cycles, halving events, and institutional interest are seen as strong factors that will continue to shape its price movement.
