Bitcoin has been struggling lately, and we’ve all felt the ups and downs. Every time it makes a little progress, it seems like a sharp drop follows right behind. In just the past week, Bitcoin’s price has slid a little under 8%. So, what’s causing this downturn?
Why Is Bitcoin Dropping?
A big part of the recent slump comes from the broader economic picture. Recent data from the U.S. labor market points to weakening conditions, which has sparked fears of a potential recession. This kind of uncertainty pushes investors to shy away from riskier assets like Bitcoin.
But that’s not the only factor. Regulatory issues are also playing a major role in the current market mood. A recent negative ruling against Coinbase has shaken confidence in the crypto space, and the ongoing SEC battle with Ripple isn’t helping either. With a potential appeal still on the table, these legal headwinds are making big investors hesitant. We can see this in the recent outflows from Bitcoin Spot ETFs, where large sums have been exiting this week instead of flowing in.
The tech sector isn’t doing Bitcoin any favors, either. Tech stocks have been hit hard recently, facing sharp corrections that are also spilling over into the Bitcoin market. There’s growing fear of a “tech bubble,” especially after stocks like Nvidia saw enormous gains—over 1,000% in just two years.
Is This 2019 All Over Again?
If you’re wondering when the next bull run will kick in, you’re not alone. While it’s tough to predict, some patterns are emerging that look a lot like what we saw back in 2019. According to a recent analysis from CryptoQuant, we’re seeing a rise in Bitcoin that stays on the same address for six months or less—something that happened during the 2019 cycle.
Back then, it took about 500 days for Bitcoin to bounce back and surpass its previous all-time high of $20,000 from December 2017. Today, many of us who bought around the March 2024 high are either selling at a loss or holding on, waiting for better days. If history repeats, we could see a similar timeline before a strong recovery.
And let’s not forget, the 2020 bull market had some delays due to the COVID-19 pandemic. This past experience shows that external factors can push timelines, so patience might be key.
Looking Ahead: Mid-Cycle Insights
CryptoQuant’s Founder and CEO recently shared his thoughts on X, noting that Coinbase’s Bitcoin spot trading volume dominance has returned to levels seen before spot ETFs came into play. He suggested that for the bull cycle to continue, demand in the U.S. needs to bounce back, which he expects might happen in Q4. However, he also reminded us that predictions aren’t guaranteed: “I could be wrong. We’re mid-cycle and haven’t hit the retail bubble yet.”
Coinbase's #Bitcoin spot trading volume dominance is back to pre-spot ETF levels.
For the bull cycle to continue, U.S. demand needs to rebound. I expect this in Q4, but I could be wrong.
We're mid-cycle and haven't hit the retail bubble yet. pic.twitter.com/9YQ2dCtfXY
— Ki Young Ju (@ki_young_ju) September 7, 2024
The big question now is how long this phase will last and when we might see the next big upward swing.
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