Other analysts are still optimistic, due to factors like increasing global M2 money supply and historical price correlations. Meanwhile, Bitcoin's recent $12 billion open interest shakeout is also seen by some as a necessary reset for future gains, though upcoming Fed decisions could drive further volatility. Bitcoin Bull Market Over? CryptoQuant CEO Ki Young Ju recently made a stark reversal in his Bitcoin market outlook, and stated that the cryptocurrency’s bull cycle is now over and that it may face six to twelve months of bearish or sideways price action. This is a big shift from his stance earlier in the month when he expressed confidence that Bitcoin’s bull cycle, while slow, is still very much intact. According to Ju, on-chain metrics have turned entirely bearish, with fresh liquidity drying up and new whales offloading Bitcoin at lower prices. His latest statement was made just days after reports that Bitcoin funding rates, which measure the cost of maintaining long or short positions in futures markets, have hovered near zero. This suggests that there is growing uncertainty among traders. Despite Ju’s bearish outlook, not all analysts share his perspective. Swyftx lead analyst Pav Hundal dismissed the need for panic by explaining that while some investors have been spooked by US President Donald Trump’s tariffs, the broader global economy is trending in the right direction. He believes that risk assets like Bitcoin will see renewed inflows once market conditions start to stabilize. Another argument for an impending Bitcoin recovery came from crypto analyst Seth , who pointed to the global M2 money supply reaching a new all-time high. This metric often correlates with Bitcoin’s price movements. He believes that this surge in liquidity could drive another Bitcoin rally in the near future. Supporting this theory, CoinRoutes CEO Dave Weisberger stated that if Bitcoin continues to follow historical trends, it could reach a new all-time high by late April. He placed a lot of emphasis on the fact that Bitcoin’s beta correlation with money supply suggests a strong probability of price appreciation. Former Phunware CEO Alan Knitowski offered an even more dramatic outlook by stating that Bitcoin’s current price is much lower than where it should be based on historical data. According to his calculations, Bitcoin’s lower bound at this stage of the cycle should be around $250,000. Meanwhile, Swan Bitcoin CEO Cory Klippsten is still optimistic, and estimated that there is more than a 50% chance that Bitcoin will surpass its previous all-time high before the end of June. Bitcoin’s current all-time high of $109,000 was reached on Jan. 20, just hours before Trump was inaugurated as US President. Bitcoin’s $12 Billion Shakeout May Set Up Next Rally Bitcoin’s recent $12 billion open interest shakeout may have been a necessary catalyst for the cryptocurrency to regain its bullish momentum, according to a crypto analyst. CryptoQuant contributor DarkFost described the event as a natural market reset, and an essential phase for sustaining a bullish continuation. Looking at historical trends, he noticed that past deleveraging events often presented strong buying opportunities for the short to medium term. (Source: CryptoQuant ) Data from CoinGlass shows that on Feb. 20, Bitcoin’s open interest, which tracks the total number of unsettled Bitcoin derivative contracts like options and futures, stood at $61.42 billion before plunging 19% to $49.71 billion by March 4. The decline occurred during heightened market volatility driven by uncertainty surrounding US President Donald Trump’s tariffs and the future of US interest rates. Feb. 25 saw Bitcoin retracing below $90,000, and just two days later, on Feb. 27, it briefly dipped below $80,000 for the first time since November. Despite this turbulence, Bitcoin was able to slightly rebound, and is now trading hands at $82,424, according to CoinMarketCap data. Bitcoin’s price action over the past month (Source: CoinMarketCap ) On the other hand, Bitget chief analyst Ryan Lee warned that Bitcoin’s price and open interest could stay volatile, especially ahead of the March 19 Federal Open Market Committee meeting. While the market broadly expects the Federal Reserve to keep interest rates unchanged, any unexpected hawkish signals could put downward pressure on Bitcoin and other risk assets. The CME Group’s FedWatch tool currently estimates a 99% probability that the Fed will hold rates steady. Meanwhile, Bitcoin’s open interest has seen a modest recovery, rising 6.5% over the past five days to $49.02 billion. Analysts Predict Crypto Rally if Fed Winds Down QT Betters on Polymarket are convinced that the US Federal Reserve will end its quantitative tightening program by May, which is a decision that many analysts believe could spark the next phase of the crypto bull market. On March 14, Polymarket’s odds that the Fed will halt QT by April 30 reached 100%. (Source: Polymarket ) The prediction market first gained notoriety for accurately forecasting Donald Trump’s rise during the 2024 US presidential election, and it has accumulated more than $6.2 million in trading volume for the wager titled “Will Fed end QT before May?” Quantitative tightening is a policy tool that is used by the Fed to withdraw liquidity from the financial system by allowing bonds on its balance sheet to mature. This approach contrasts with quantitative easing, which saw the central bank expand its balance sheet to inject liquidity after the 2008 financial crisis. The Fed’s QT program has been in place since June of 2022 as part of its broader efforts to curb inflation. By keeping short-term interest rates elevated and reducing its balance sheet, the Fed aimed to influence long-term borrowing costs and limit excess liquidity. While QT did not immediately hinder the performance of traditional and crypto markets, it has become a growing concern due to recent macroeconomic shocks linked to the Trump administration. In 2022, Cambridge Associates senior investment director TJ Scavone predicted that QT’s negative effects would only become apparent when a major financial stressor emerged. He warned that combining QT with an already volatile economic environment could heighten risks, increasing the likelihood that something critical in the financial system would break. Crypto markets have been particularly sensitive to these macroeconomic developments. In February, heightened volatility rocked digital assets, while by March, the S&P 500 Index entered correction territory. Bitcoin also declined by almost 30% by early March. The prevailing expectation that the Fed will soon wind down QT has fueled optimism among crypto analysts, as an influx of liquidity into financial markets could drive renewed interest in risk assets. Many also believe that expected rate cuts in the second half of the year could provide even more support to reverse the ongoing downturn in crypto prices. Crypto analyst Benjamin Cowen supports this thesis, and suggested that the end of QT will likely be followed by a broad market rally. While the Fed has yet to officially confirm any changes to its QT policy, minutes from its January Federal Open Market Committee meeting revealed that some officials were concerned about the effects of balance sheet reductions, particularly regarding their potential impact on the US debt ceiling debate. The minutes noted that some policymakers considered a temporary pause or slowdown in QT as an appropriate response to these economic uncertainties.
