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The recent slowdown in Tether reserves raises concerns about Bitcoin’s price trajectory, indicating a potential bearish market outlook.
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As Tether’s growth stalls, the dynamics of Bitcoin’s market cap versus realized cap reveal historical precedents for bearish trends.
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Notably, a CryptoQuant analyst suggests that the “bull cycle is over,” reflecting the current sentiment surrounding Bitcoin.
This article explores Bitcoin’s bearish outlook amid Tether reserve stagnation, declining market cap, and insights from financial experts.
Assessing the bearish arguments for Bitcoin amidst Tether’s reserve stagnation
The recent performance of Bitcoin spot ETFs has been less than favorable, driven by a pessimistic macroeconomic outlook influenced by ongoing trade tensions. Investor sentiment has turned cautious, particularly in light of escalating tariffs initiated by the U.S. on imports from China.
Source: Coinglass
While Blackrock’s iShares Bitcoin Trust ETF (IBIT) has seen some inflows recently, most other Bitcoin investment products have succumbed to selling pressure, reinforcing a bearish sentiment as noted by analysts.
Is the BTC bull cycle over? Analyzing market trends
In a recent discussion on X (formerly Twitter), a leading crypto analyst posited that the previous bull cycle for Bitcoin may have concluded, citing the Realized Cap as critical for this assessment.
Source: Ki Young Ju on X
The Market Cap, calculated through circulating supply and current price, contrasts with the Realized Cap, which assesses Bitcoin’s value based on the last transaction price of each coin—offering a more accurate depiction of market dynamics.
Recent analyses highlight a decline in the 365-day moving average of delta growth, a deterioration that suggests a bear market, as noted since late 2024. Such trends are typically indicative of waning investor confidence and a lack of capital inflow sufficient to elevate prices.
The analyst further noted a historical pattern, making parallels between the current market situation and December 2021, which followed a previous all-time high of $69,000 before a notable decline. Current forecasts suggest that this bearish phase may persist for several months.
Source: CryptoQuant
Overall, the static nature of Tether’s reserves in recent months reinforces the bearish outlook, yet factors such as the global M2 money supply paint a slightly varied picture, suggesting potential for a buying resurgence in the future.
While current indicators point toward a bear market, the lack of overheating metrics historically associated with market tops suggests a need for continued observation rather than immediate conclusions.
Conclusion
Amidst these challenges, it is essential for investors to maintain a cautious outlook on Bitcoin’s price movements, considering prevailing market dynamics and expert analytics. The interplay between macroeconomic factors and cryptocurrency investments will likely shape the upcoming months, underlining the need for strategic decision-making among investors.
