Bitcoin faced increased selling pressure on Wednesday, briefly dropping near the $95,000 support level before recovering. This decline triggered a broader market correction, with most major altcoins struggling. XRP stood out with a daily gain of over 2%, while Ethereum (ETH), Binance Coin (BNB), and Solana (SOL) recorded slight pullbacks. Bitcoin itself fell by nearly 2% during the same period.
The overall cryptocurrency market capitalization decreased by 7% in the past 24 hours, settling at $3.49 trillion. Experts suggest that Bitcoin's price may undergo further consolidation before demand returns to the market.
Is the Bitcoin Bull Run Over?
The 2024 Bitcoin rally was largely driven by institutional investment inflows and the approval of US spot Exchange Traded Funds (ETFs). While institutional interest is gradually returning, macroeconomic factors and the strength of the US dollar are influencing BTC price trends in 2025.
David Morrison, Senior Market Analyst at Trade Nation, shared his perspective with FXStreet:
"Bitcoin has been a bit disappointing. After breaking through $100,000 on Monday afternoon, it fell back below that level just 24 hours later. Selling pressure continued this morning, and it’s now back to where it was last Thursday when it was accumulating momentum for an upward push."
"The daily MACD has indeed pulled back sharply from the 'overbought' levels seen in November and December. But it may need to find a bottom and consolidate further before buyers return. Unless, of course, there's a significant increase in overall market 'risk-on' sentiment," he added.
While Morrison looks for a return of demand in the crypto market, Ilya Volkov, CEO of YouHodler, holds a different view. He believes traders may not witness growth in cryptocurrencies similar to what was seen in 2024.
"The main driver of crypto growth last year was the ETF launch, which ignited huge demand for crypto assets from retail investors. In 2025, we anticipate a pullback in global equity indices, which could also affect crypto ETFs and lead to decreased crypto valuations. It's hard to predict the depth and duration of this pullback, but a key indicator will be the performance of the S&P 500, which often sets the tone for other global equity markets," Volkov stated.
Volkov's bearish outlook for cryptocurrencies in 2025 was somewhat confirmed by Tuesday's poor Bitcoin ETF flows, which followed significant inflows on the previous Friday and Monday.
Market Cap Shrinks 7% in 24 Hours: What’s Next for Crypto?
As of Wednesday, the total crypto market capitalization fell to $3.49 trillion, leaving traders concerned about the state of the ecosystem and expectations for altcoins in 2025. Bitcoin's dominance decreased on both weekly and daily timeframes, hovering around 57%.
A daily chart from TradingView shows signs of recovery in the total market capitalization of all altcoins.
The combined market cap of all cryptocurrencies except Bitcoin remains well below the $1.71 trillion peak seen during the 2021 bull market. Until this metric recovers, the future of the Bitcoin bull run in 2025 may remain uncertain.
According to a recent K33 Research report, the average trading volume for Bitcoin on spot exchanges decreased by 15% month-over-month. While traders await the return of cryptocurrency demand and buying pressure, two-way liquidations could occur for Bitcoin and top altcoins on derivatives exchanges.
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Frequently Asked Questions
What caused the recent Bitcoin price drop?
The decline was driven by increased selling pressure, a stronger US dollar, and shifting macroeconomic expectations. Traders are also adjusting positions after the recent rally, leading to natural market consolidation.
Will altcoins recover in 2025?
While some altcoins like XRP have shown resilience, broader recovery depends on renewed institutional interest, regulatory clarity, and overall market sentiment. A rebound in global risk assets could positively influence altcoin performance.
How do ETF flows affect Bitcoin’s price?
ETF inflows typically signal strong institutional demand, which can drive prices up. Conversely, outflows or reduced activity may indicate caution among investors, contributing to price corrections or consolidation phases.
What role does the US dollar play in crypto valuation?
A stronger US dollar often creates headwinds for Bitcoin and other cryptocurrencies, as it reduces the appeal of alternative stores of value. Macroeconomic policies and interest rate expectations significantly influence this dynamic.
Is now a good time to invest in Bitcoin?
Market timing is challenging. While current prices may offer entry points for long-term investors, short-term volatility remains high. Conduct thorough research and consider your risk tolerance before making investment decisions.
What should traders watch in the coming months?
Key indicators include Bitcoin ETF flow data, movements in the S&P 500, US monetary policy signals, and regulatory developments. These factors will provide insight into market direction and potential opportunities.
Conclusion
Bitcoin's struggle to maintain momentum above $100,000 highlights the ongoing uncertainty in cryptocurrency markets. While institutional interest through ETFs provided a foundation for the 2024 rally, macroeconomic factors and global equity trends are now playing a larger role in shaping market dynamics.
Traders and investors should prepare for potential consolidation in the near term, keeping a close watch on key support levels and broader financial indicators. Understanding these interconnected factors can help navigate the evolving landscape of digital assets in 2025 and beyond.