Key Points
- Bitcoin has experienced a 24% drop from its all-time high, causing concern amongst investors.
- Despite the drop, some analysts believe Bitcoin is close to its local bottom, but a Black Swan event could cause further decline.
Bitcoin (BTC) has been on a rollercoaster ride after reaching an all-time high of $109,114 in January. The market seemed promising when President Donald Trump took office with a more pro-crypto stance, but it has since taken a sharp turn.
As of March 13, Bitcoin is valued at approximately $82,600, a significant 24% drop from its January peak. This drop followed a four-month low of $76,600 on March 11.
Market Challenges
The market is grappling with challenges from various fronts. Factors such as Wall Street’s risk aversion, growing U.S. recession fears, and Trump’s new tariff policies have added to the uncertainty.
Investors were also let down by the absence of new BTC purchases under Trump’s strategic reserve plan. Many had anticipated this plan to provide a steady buying force for Bitcoin.
On a macroeconomic level, inflation data released on March 12 offered a brief glimmer of hope. The consumer price index rose by just 0.2% in February, slowing to an annual inflation rate of 2.8% — down from 0.5% in January.
The market initially responded positively to the softer CPI data. Bitcoin surged above $84,000, and altcoins saw double-digit gains. The S&P 500 and Nasdaq 100 also recorded slight upticks.
However, this optimism was short-lived. As the day progressed, BTC and equities wiped out most of their gains, dragged down by Trump’s escalating tariff war against major trading partners.
Investor Sentiment Shifts
These actions have made investors nervous, shifting market sentiment towards a risk-off approach. This means cash and safer assets like gold and bonds become more attractive than volatile options like Bitcoin.
With all these factors at play, Bitcoin finds itself at a crossroads. It’s uncertain whether it will stabilize and gear up for another run, or if further corrections are on the horizon.
Since February 13, spot Bitcoin ETFs have been under pressure, with money flowing out at an aggressive pace. The worst hit came on February 25 when ETFs saw their largest single-day outflow ever — over $1 billion, marking a clear risk-off sentiment among institutional investors.
Despite the outflows, as of March 12, BlackRock’s IBIT remains the dominant ETF in the market, holding nearly 568,000 BTC. Fidelity’s FBTC and Grayscale’s GBTC follow, managing 197,500 BTC and 196,000 BTC, respectively.
Adding a political layer to the Bitcoin narrative, at least six members of President Trump’s cabinet hold Bitcoin, either directly or indirectly through ETFs.
Meanwhile, Bitcoin’s open interest, a crucial metric showing the total value of outstanding BTC derivative contracts, has been in a downward spiral.
After peaking at $70 billion on January 22, following Bitcoin’s new all-time high, open interest has been on a steady decline. As BTC tumbled, OI followed, dropping to a low of $45.7 billion on March 11, the same day BTC hit its four-month low.
However, in the last two days, open interest has started climbing back, adding over $1 billion as of March 13, in sync with BTC’s price recovery.
Historical Trends and Future Predictions
Bitcoin’s recent pullback from its all-time high has been sharp, but historical trends and technical indicators suggest that this could either be a temporary bottom or the beginning of a deeper correction.
Technical analyst CryptoCon points out that Bitcoin has now reached historically low RSI Bollinger Band % levels, a point where BTC rarely stays for long.
To break this down — Relative Strength Index measures momentum, while Bollinger Bands show volatility. When the RSI Bollinger % reaches extreme lows, it suggests that Bitcoin is at an oversold level, meaning the downside pressure is likely exhausting itself.
In previous cycles, when BTC hit similar RSI Bollinger % lows, it marked a strong local bottom before the next leg up.
However, this optimistic outlook is far from universally accepted. Doctor Profit, another respected analyst, lays out two possible scenarios for BTC’s next move.
In a normal market environment, BTC’s local bottom should form between $68,000 and $74,000, as confirmed by the Market Value to Realized Value indicator.
The MVRV indicator measures whether Bitcoin is overvalued or undervalued by comparing the current market price to the average purchase price of all BTC in circulation.
Right now, the MVRV suggests that BTC is approaching a strong bottom zone, meaning downside risk is limited unless something drastic happens.
That’s where the Black Swan risk comes in. While Doctor Profit initially believed a Black Swan event was highly unlikely, recent economic shifts — such as Trump’s aggressive tariff moves, global trade war concerns, and broader recession fears — make him less certain.
A severe global economic downturn, a financial crisis, or a major crypto industry collapse could push Bitcoin much lower, possibly toward $50,000. While he still leans toward the first scenario, he no longer rules out a full-blown market wipeout.
The signs are mixed. Bitcoin’s historical cycles suggest this is a healthy pullback before another rally, but global conditions have rarely been this unstable.
For now, investors should stay cautious, watch key support levels, and be prepared for heightened volatility.
While historical data favors a recovery, markets don’t move in a vacuum, and external shocks can override even the strongest technical indicators. Never invest more than you can afford to lose.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.