Bitcoin Market Analysis: Bearish Signals Emerge Amid Macroeconomic Uncertainty

Bitcoin Market Analysis: Bearish Signals Emerge

Following last week's breach of the $110,000 'Trump Bottom' upper boundary, Bitcoin (BTC) has experienced another collapse amid heightened macroeconomic uncertainty. This week saw a 10.04% drop, breaking through the lower edge of the bull market's ascending channel and the 360-day moving average, two key technical support levels.

While the US government has reopened, funds have yet to flow from the Treasury General Account (TGA), and commercial bank reserve balances remain low, exacerbating short-term liquidity pressures. In the medium term, the number of hawkish FOMC members has increased, pushing the probability of a December rate cut below 50%.

The market is dominated by selling pressure, with long-term holders taking profits and short-term traders selling at a loss. BTC ETF channels have seen the second-highest daily outflow in history. Buyers are present but highly passive, and all technical support levels seem to have lost their effectiveness.

Technical Breakdowns Signal Bearish Shift

With the effective breach of the ascending channel's lower edge and the 360-day moving average, BTC has technically entered a bear market. If capital cannot adequately return in the coming weeks, and selling pressure persists, it will be difficult for the BTC price to return to the key technical indicators mentioned above and confirm this breach on the weekly chart. Should that occur, the BTC bull cycle that began in 2022 will likely officially end.

Macroeconomic Factors and Policies

With the recent US government reopening, the September CPI will be released next week. However, as data was not collected during the shutdown, the October CPI will be permanently lost. This will significantly reduce the objectivity of the Federal Reserve's December rate cut. Non-farm payroll data has also failed to be released for several weeks. Weekly ADP data released on the 11th showed that the private sector saw a net loss of 11,000 jobs per week on average through the end of October, compared to a gain of 14,250 jobs per week earlier in October, signaling a potential reversal in hiring momentum. This is 'good news' for rate cuts.

However, the Federal Reserve continues to take a hawkish stance. Following three FOMC members adopting a hawkish stance late last week, three more joined the hawkish camp this week. This directly led to a continuous decline in the probability of a December rate cut, from an initial 90% probability to 44% this week, suggesting that a December rate cut may have been suspended once again.

Short-Term Liquidity Pressures

In terms of short-term liquidity, the accumulation of funds in the Treasury's TGA account to nearly one trillion dollars due to the government shutdown has led to a surge in SOFR. Liquidity pressures rose to recent highs on Friday, with the Nasdaq continuously falling and dropping more than 6% from its high during the day, breaking through the 60-day average. However, due to reaching a strong support level, the Nasdaq strongly rebounded during the day and eventually closed up 0.13%, closing near last Friday's low and above the 50-day average.

Currently, the recent correction in the US stock market can be described as a 'de-valuation pullback of overvalued AI concept stocks in the context of liquidity pressures and a decreased probability of a December rate cut'. For the entire turbulent 2025, there are currently no larger systemic risks to the US stock market.

Bitcoin's Weak Performance

Compared to the US stock market, Bitcoin's situation is grim. In the context of three consecutive days of losses, the Bitcoin price continued to fall sharply on Friday by 5.13%, with trading volume approaching October 10th, becoming the second worst day in this decline.

Long-term investors initiated the third wave of selling since July, and even in the past four weeks, the Bitcoin price increased selling efforts after starting to adjust downwards, which is often a characteristic of the transition phase from a bull market to a bear market. The selling volume from long-term and short-term investors on exchanges remained at a high level this week, but decreased slightly compared to last week. However, exchanges have shifted from outflows to inflows, making the future trend more prone to weakness.

Capital Shortage

However, capital providing support is extremely scarce. It can be seen that on most trading days last week, BTC ETFs and ETH ETFs were being sold, and the volume remained at a high level.

Among the main buyers in this cycle, the BTC ETF channel has turned to selling. According to media information, DATs' Strategy and BMNR are still buying in the market this week, but they are unable to provide support on their own. In the end, BTC and ETH bid farewell to this week with significant losses.

Conclusion

Technically, BTC has effectively broken through the lower edge of the ascending channel on the daily chart and is now transitioning to a bear market. Since November 2022, every mid-term adjustment has been supported on this line. This is the first time in this cycle that this key support has been broken. If the price cannot recover above the lower bound in the coming weeks, it will complete the bear market confirmation on the weekly chart.

Coupled with the Federal Reserve continuing to issue debt, short-term USD liquidity remains scarce or may even worsen, meaning that capital pressures may continue to increase in the short term, at which time BTC and Crypto will continue to bear pressure. In the medium term, the September CPI to be released next week will also be critical. A 44% probability of a rate cut has already been priced in. If it continues to decline, the price will likely continue to decline. Conversely, if the CPI stabilizes and employment data is weak, a December rate cut is still possible. Based on this 'optimistic' assumption, capital from ETF channels and the like can quickly return, and the logic of this 'transition to a bear market crisis' can still be eliminated. In addition, long-term investor selling is also worth close attention. If it slows down or returns to accumulation, the market may also get a temporary respite.

According to eMerge Engine, the EMC BTC Cycle Metrics is 0, entering a 'downturn period' (bear market).