Bitcoin's impressive bull run, which started in early 2023, may be coming to an end, according to a growing number of market analysts. Several factors are contributing to this sentiment, leading some to believe that a bear market is on the horizon. Here are three key reasons why the bitcoin bull market might be over:
1. Technical Indicators Suggest a Downturn
Technical analysis of Bitcoin's price charts reveals potential bearish signals. Bitcoin has been trading in a bearish channel, increasing the likelihood of a breakdown. Momentum indicators, such as the Moving Average Convergence/Divergence (MACD), have formed bearish crosses, further suggesting a downward trend. The Relative Strength Index (RSI) is also declining, indicating weakening buying pressure. Jon Glover, a market expert and Chief Investment Officer at Ledn, believes Bitcoin broke below \$108,000, completing its five-wave cycle and starting a bear market. Glover expects Bitcoin to trade between \$70,000 and \$80,000, possibly even lower, by late 2026. These technical indicators suggest that the upward momentum has stalled, and a correction is likely.
2. Macroeconomic Headwinds and Policy Shifts
Changes in macroeconomic conditions and central bank policies are also weighing on Bitcoin's price. The stimulus provided by central banks, such as the US Federal Reserve, during the pandemic fueled the crypto bull market. However, as the Fed raises interest rates and decreases its balance sheet to combat inflation, the crypto market has weakened. Higher interest rates make traditional investments more attractive, pulling money away from Bitcoin. The market is seeking policy stability, and uncertainty regarding future tightening measures is contributing to bearish sentiment. Geopolitical tensions and global economic events can also negatively impact broader market prices, including cryptocurrencies.
3. Weakening Demand and ETF Inflows
A slowdown in Exchange-Traded Fund (ETF) inflows is another cause for concern. ETFs have been a significant source of institutional buying, and a decline in their inflows indicates weakening demand. When institutional buying cools down and there isn't sufficient retail or whale activity to compensate, the price is likely to slip. Some analysts point out that Bitcoin has failed to ward off bearish threats, indicating a shift from defense to offense. The real signal now lies in inflows to BTC ETFs, and whether institutional buying holds steady. Without strong demand, Bitcoin's price is vulnerable to further declines.
While the long-term investment case for Bitcoin may remain intact, caution is advised. Investors should be prepared for continued volatility and potential downside risk. Monitoring key indicators, such as ETF inflows, macroeconomic data, and technical patterns, will be crucial for navigating the market in the coming months.
