Since Bitcoin reached an all-time high of $64,840 on April 14, its price has trended downward, even dropping to around $30,000 at one point—a decline of over 50%. Bitcoin’s total market capitalization also fell from $1.18 trillion to $610 billion.
Has the bull market ended? Are we now in a bear market? Debates about market trends have intensified recently. Let’s examine where the market truly stands by analyzing several key metrics.
Signs Pointing to a Bear Market
Bitcoin Mining Difficulty Set for Third Consecutive Drop
According to data from BTC.com, Bitcoin’s mining difficulty is expected to decrease by 11.12%. This follows previous reductions of 5.30% on June 6 and 15.97% on May 30. Within a month, mining difficulty dropped from 25.046 T to 19.932 T. The last time Bitcoin experienced three consecutive mining difficulty drops was in December 2018, during a miner-induced “death spiral” that saw large numbers of miners powering down. Bitcoin’s price plummeted to a low of $3,125 on December 15, 2018, an 84% correction from its peak in December 2017.
Institutional Selling: Bitcoin Fund Holdings Hit Four-Month Low
Data from Bytetreeam shows that as of June 19, various Bitcoin funds—including U.S. and Canadian closed-end funds and ETFs—held 782,558 BTC. This represents a sharp reduction of over 15,000 BTC within three days, marking the lowest level since February 25. These funds had increased their Bitcoin holdings by more than 300,000 BTC since October 2020, reaching a peak of over 817,000 BTC on May 12. Since then, their holdings have consistently declined.
Breakdown of the 120-Day Moving Average
The 120-day moving average is widely regarded by traders as a critical indicator of long-term price trends. When the price remains below this average for an extended period and then breaks above it, it often signals a reversal and the start of an upward trend. Conversely, when the price falls below the 120-day moving average after trading above it, it may indicate the beginning of a downtrend.
In the previous bull market, which started in October 2015, Bitcoin broke above the 120-day moving average at $250. The bull run lasted two years, with Bitcoin rising 40 times before finally breaking below the moving average at $10,000 in January 2018.
The current cycle began in March 2019 when Bitcoin surpassed the 120-day moving average at $3,800. However, the “Black Thursday” event in March 2020 disrupted this momentum. Bitcoin reclaimed the 120-day moving average at $8,000 in April 2020, officially entering a bull market. In May 2021, Bitcoin fell below $50,000 and broke the 120-day moving average again. This bull phase lasted about one year and delivered a 6x return.
Formation of a “Death Cross”
Bitcoin has recently formed a “death cross,” which occurs when the 50-day moving average falls below the 200-day moving average. Historical death cross patterns in 2018 and 2019 were followed by further declines of 70% and 47%, respectively. Some analysts believe this technical pattern could signal the start of a bear market similar to 2018.
“Max Pain” Price Declines for Two Consecutive Months
On June 25, the Bitcoin options market saw 68,586 BTC in contracts expire, with a “max pain” price of $40,000. The max pain price is where option buyers experience the maximum loss (losing all premium paid), while sellers—often institutional players—profit the most. When the max pain price is above the spot price, it generally indicates bearish sentiment. Since April, the max pain price has continued to decline, suggesting weakening market confidence.
Symbolic Events Mirroring Previous Cycle Tops
In the last cycle, Bitcoin reached its peak on the day CME Group launched Bitcoin futures. In this cycle, the all-time high coincided with Coinbase’s direct listing on Nasdaq.
The Ethereum Foundation also made significant sales near market peaks. During the last bull market, Vitalik Buterin sold 70,000 ETH from the Foundation’s treasury and an additional 30,000 ETH of his own holdings around $1,400 per ETH, cashing out $22 million. On May 17 of this year, the Ethereum Foundation transferred 35,000 ETH to an exchange, worth approximately $123 million at the time.
Additionally, the Coinbase app topped the U.S. Apple App Store charts in both December 2017 and May 2021, surpassing popular apps like TikTok and Facebook.
Arguments Supporting a Continued Bull Market
PlanB’s $135,000 Year-End Bitcoin Price Target
PlanB, the creator of the popular stock-to-flow (S2F) model, recently stated that Bitcoin could reach $135,000 by the end of 2021. The S2F model currently values Bitcoin at around $92,000. Historically, Bitcoin’s price has oscillated around this model’s valuation. At current levels, Bitcoin is trading below the model’s estimate, suggesting potential upward movement.
Jiang Zhuo’er’s 60-Day Bitcoin Rally Indicator
Jiang Zhuo’er, CEO of BTC.TOP, developed an indicator that tracks the 60-day cumulative price gain of Bitcoin. At the peak of the 2013 and 2017 bull markets, this indicator reached 237% and 134%, respectively. Currently, it stands at -38.25%. Even when Bitcoin hit $64,000, the indicator only reached 34%, well below previous cycle peaks, implying that the market may not be overheated.
Declining Bitcoin Transfers from Miners to Exchanges
Data from CryptoQuant shows that the total value of Bitcoin transferred from major mining pools to exchanges has been declining since January 2021. This suggests that selling pressure from miners may be easing. However, it’s important to note that this could also be influenced by the drop in Bitcoin’s price and the fact that large miners may use over-the-counter (OTC) channels for big sales.
Reduced Spot Exchange Inflows
CryptoQuant data also indicates that spot exchange inflows have fallen to their lowest level in a month. Lower inflows generally signal reduced selling pressure, which can be supportive of price stability or recovery.
Su Zhu’s $72,000 Bitcoin Prediction
Su Zhu, founder of Three Arrows Capital, has predicted that Bitcoin will reach $72,000. With a background in derivatives trading at Credit Suisse and Deutsche Bank, Zhu is considered a knowledgeable voice in the market. Although Bitcoin continued to decline after his prediction, he recently stated that the correction, while severe, does not necessarily mean the bull market is over. He added that institutional investors might see this as an entry opportunity.
Bloomberg Crypto Report: $100,000 Bitcoin Target
In a June 4 report, Bloomberg Intelligence senior commodity strategist Mike McGlone argued that Bitcoin is more likely to reach $100,000 than fall below $20,000. Key supporting factors include Bitcoin’s 260-day volatility dropping to record lows compared to major assets like the S&P 500, reduced daily supply due to halving events, growing institutional adoption, and the launch of Ethereum futures and ETFs in Canada and Europe.
Continued Project Funding and Institutional Adoption
In just the last five days, at least 12 cryptocurrency projects have announced funding rounds totaling over $400 million. This continued investment reflects strong confidence in the long-term growth of the ecosystem.
On June 21, MicroStrategy purchased an additional 13,005 BTC for $489 million, with an average price of $37,617 per Bitcoin. The company now holds 105,085 BTC, acquired at an average price of $26,080 per Bitcoin.
Positive Network Upgrades and Macro Trends
Bitcoin has locked in the Taproot upgrade, expected to activate in November. Ethereum’s London upgrade, scheduled for mid-July, could bring significant changes to the network’s economics and broader market dynamics. Layer-2 scaling solutions and NFTs are also areas with strong growth potential.
El Salvador’s adoption of Bitcoin as legal tender may inspire other countries, like Paraguay, to follow. Moreover, the U.S. Federal Reserve’s indication that it is unlikely to raise interest rates in 2021 may provide additional support for risk assets, including cryptocurrencies.
Frequently Asked Questions
What defines a crypto bull or bear market?
A bull market is characterized by rising prices and positive investor sentiment, often lasting for months or years. A bear market involves declining prices and pessimistic outlooks, typically with drops of 20% or more from recent highs.
How does mining difficulty affect Bitcoin’s price?
Mining difficulty adjustments help maintain network stability. consecutive drops may indicate miner capitulation, which has historically sometimes—but not always—correlated with price bottoms.
Why are institutional investors important for crypto?
Institutional involvement brings greater liquidity, regulatory clarity, and long-term investment perspectives, which can help reduce volatility and increase mainstream adoption.
What is the significance of exchange inflow data?
Lower exchange inflows can indicate reduced selling intent, which may support price recovery, while high inflows can signal increased selling pressure.
How do network upgrades influence market trends?
Upgrades like Taproot and Ethereum’s London hard fork can improve functionality, security, and economic efficiency, often boosting investor confidence and driving positive price action.
Should I invest based on bull/bear market predictions?
Market predictions are speculative and should not be the sole basis for investment decisions. Always conduct thorough research, consider your risk tolerance, and diversify your investments. For those looking to stay updated with real-time market data, you can explore more strategies and analytical tools.
Note: This content is for informational purposes only and is not intended as investment advice. The cryptocurrency market is highly volatile; always do your own research before investing.