Bitcoin faced a sharp correction after reaching its all-time high in early 2024. BTC, which surged to $109,114 with President Donald Trump taking office in January, saw a low of $76,600 on March 11, the lowest in four months. As of March 13, it is trading around $82,600 after a 24% pullback. With many factors creating uncertainty in the market, analysts are assessing the future direction of Bitcoin.

MACROECONOMIC UNCERTAINTIES AND THEIR IMPACT ON BITCOIN The decline in Bitcoin is not solely a situation unique to the crypto market. The global economy is facing volatility due to trade wars and interest rate policies. Rising recession fears in the U.S., Trump’s tariff policies, and global trade tensions are negatively affecting risk perception. Particularly, trade tensions with Canada and the European Union are creating a panic in the markets. The U.S. imposing a 25% tariff on steel and aluminum imported from Canada led to Canada imposing equivalent taxes on $21 billion worth of U.S. goods. The European Union also escalated trade wars by announcing a retaliatory tariff of $28 billion. These developments steer investors away from risk, making safe haven assets like cash, gold, and bonds more attractive. Volatile investments like Bitcoin faced short-term selling pressure. The inflation data released in the U.S. on March 12 provided a brief relief. The consumer price index in February increased by only 0.2%, lowering the annual inflation to 2.8%. Core inflation also dropped to 3.1%, the lowest since April 2021. Bitcoin briefly rose above $84,000 with this data but gradually gave back its gains.

INSTITUTIONAL INVESTORS EXITING BTC A significant determinant in the Bitcoin market is the attitude of institutional investors. There has been a significant outflow from spot Bitcoin ETFs since February 13. The worst blow came on February 25 with an outflow of over $1 billion, clearly showing institutional investors’ risk-averse tendencies. As of March 12, BlackRock’s IBIT fund still holds the most significant ETF on the market with 568,000 BTC. Fidelity’s FBTC fund holds 197,500 BTC, while Grayscale’s GBTC fund has 196,000 BTC. Another aspect lending a political dimension to the Bitcoin narrative is at least six officials in the Trump administration directly owning BTC or through ETFs. Health and Human Services Secretary Robert F. Kennedy Jr. has a Bitcoin investment ranging from $1 to $5 million, while Treasury Secretary Scott Bessent is known to have invested between $250,001 and $500,000 in BlackRock’s Bitcoin ETF. Bessent announcing to liquidate this position within 90 days highlights the connection between the administration and crypto markets. WHAT DO THE TECHNICAL DATA SAY? The open interest (OI) level in the Bitcoin futures market also provides crucial signals about investor behavior. The OI exceeded $70 billion on January 22 when BTC hit its all-time high, but it decreased as Bitcoin fell, reaching $45.7 billion as of March 11. However, in the last two days, the OI has bounced back, exceeding $1 billion as of March 13. This indicates that some investors have cautiously started entering long positions. The technical analyst CryptoCon notes that Bitcoin has historically reached the lowest levels in the Relative Strength Index (RSI) Bollinger Bands. These points have often marked a bottom for BTC in the past, followed by a recovery. CryptoCon recalls similar cycles in 2013, 2016, and 2020, where BTC reached new highs 9-12 months after a correction. According to them, Bitcoin’s current situation resembles March 2017, suggesting possible new highs in the long term. However, not all analysts share this optimistic view. Analysts like Doctor Profit are focusing on two different scenarios for Bitcoin’s direction: Dip at $68,000 – $74,000 Level: The Market Value to Realized Value (MVRV) indicator shows that BTC has formed a strong bottom at these levels. Despite ongoing macroeconomic uncertainties, a new rally could start if BTC holds at these levels. Black Swan Scenario: Trump escalating trade wars, global recession concerns, and a possible financial crisis could push Bitcoin much lower. If a major economic shock occurs, there is a possibility that BTC could drop to $50,000. THE FUTURE OF BITCOIN The market is waiting to see whether Bitcoin will follow historical cycles or be dominated by macroeconomic pressures. Investors should closely monitor trade wars and global economic dynamics alongside long-term technical indicators. For Bitcoin to recover, ETF inflows need to turn positive again, and open interest levels need to steadily rise. Uncertainty prevails in the market currently, and investors are advised to avoid excessive risk-taking. While technical indicators may be optimistic, it should not be forgotten that the market is sensitive to external shocks.