Bitcoin Price Analysis: On the Brink of a Bear Market? A Deep Dive into Technicals and Macroeconomics

Bitcoin Price Analysis: A Critical Crossroads

Following the interest rate cut in September, BTC staged a rally in early October, hitting a historic high of $126,296.00 on October 6th. Since then, BTC suddenly reversed, with capital inflows slowing and holders continuously selling off, forcing the price to rebalance downwards. As of this week, BTC has fallen by as much as 21%, which is a medium-level correction in this bull run (with a maximum level of around 30%).

Technically, BTC has already broken through the 200-day moving average that it held last week and has fallen back into the "Trump Bottom" ($90,000-$110,000). Most critically, the BTC price has fallen to the lower edge of the ascending channel line established since November 2022 in this bull market. This lower edge overlaps with the 360-day moving average, which is crucial for long-term investors. The competition around this price point is bound to be very fierce. If this support is broken, BTC will technically complete a "bull-bear" transition and officially enter a "downward period".

Policy, Macrofinance, and Economic Data

As a highly volatile emerging asset, BTC and crypto assets are most sensitive to macro liquidity and risk appetite. This has been evident in this correction.

The first round of price drops, starting on October 10th, was triggered by Trump's announcement on social media of another 100% tariff on China. This round of price drops triggered the "Binance USDe" incident, causing considerable damage to the internal structure of the crypto market.

The second round of price drops, starting on November 3rd, was triggered by hawkish statements from Federal Reserve officials (lower probability of a rate cut in December) and the impending U.S. liquidity crisis due to the U.S. government shutdown near a record high. During this period, because spending was difficult due to the U.S. government shutdown, the balance in the Federal Reserve's TGA account continued to reach record highs. Market liquidity was continuously being "sucked away", and the SOFR rate once exceeded 4.3% (October 28th), far higher than the federal funds rate, indicating very tight bank liquidity. The U.S. dollar index once rose to 100.364 (November 5th). Under this pressure, risk assets were continuously subjected to passive valuation haircuts. The past week saw the Nasdaq have its worst week since April, falling 3.04% for the entire week. Due to the U.S. government shutdown, government-side economic and employment data could not be released in a timely manner, and the market could only focus on relevant data released by the private sector. ADP data released on Wednesday showed signs of stabilization in the U.S. job market after two consecutive months of declines. U.S. ADP employment increased by 42,000 in October, significantly exceeding the expected 30,000, and also reversed the previous month's decrease of 32,000 (currently revised to 29,000). This added uncertainty to whether the Federal Reserve will continue to cut interest rates in December. The University of Michigan consumer confidence index released on Friday showed that consumer confidence in November hit a more than three-year low and was also the second lowest on record since 1978. This provided some support for a rate cut in December. The subjective statements of Federal Reserve officials last week leaned towards uncertainty about a rate cut in December. A week later, FedWatch data showed that the probability of a rate cut in December has decreased by more than 30%, currently at 66.9%. Regarding the federal government shutdown, the Democratic Party has put forward clear conditions this week, which the Republican Party failed to pass. The "presentation of conditions" was considered by the market to be an important breakthrough towards a shutdown. U.S. stocks and BTC saw a strong recovery on Friday, which was a positive response to this "progress". Trump also proposed using "abolishing the filibuster rule" to end the dispute, passing appropriations bills by a "simple majority" and immediately reopening the government. The Senate held an extra session over the weekend, and by Sunday, news broke that more definite progress had been made in the "talks". Both sides have approached their limits. Goldman Sachs expects the U.S. government shutdown to end within two weeks. We believe that the root cause of the current U.S. stock market correction is the decreased probability of a rate cut in the medium term and the recent financial squeeze under the backdrop of the federal government shutdown. The government shutdown problem may be resolved in one to two weeks, but whether interest rates will be cut again in December will depend on the economic and employment data released after the shutdown ends. Volatility and uncertainty remain the main themes of the November market. But expectations are approaching a turning point. The BTC price in the crypto market fell sharply by 5.28% this week, and the price rebounded on Sunday, closing at $104,694.95, with an increase in volume. Technically, the price violently fell below the $100,000 level on Tuesday, and the price fluctuated around this price for most of the remaining time. This price is also the 360-day moving average. This price is also the lower edge of the ascending channel of this bull market that we have been monitoring for a long time. If the price effectively falls below this price, this bull market of BTC will officially end technically.

Capital Flow Analysis and Cycle Indicators

The adjustment of market risk appetite ultimately manifests in a decrease in capital inflows and an increase in sell-offs. In the past week, long and short-term traders transferred a total of 170,602 BTC to exchanges. The scale of sell-offs increased for the third consecutive week, but buying did not effectively expand, resulting in a weak outflow of 967 BTC from exchanges. Looking at the funding side, the outflow this week reached $2.60 billion, which is a further increase from last week. Among the funding categories, only DATs channels saw a slight inflow, while BTC Spot ETF and stablecoin channels saw significant outflows. Of course, this outflow has been factored into the BTC price. In September 2024 and April 2025, similar situations of weekly outflows across all market channels appeared, after which they turned into inflows as negative factors approached a turning point, leading to a new round of rises. However, if it is not possible to turn into inflows, it can be confirmed that the bear market has officially begun based on historical data. Holdings of long-term traders, who monitor cycle characteristics, fell sharply this week by nearly 120,000 BTC, indicating that the long-term trader group still believes that the bull market cycle has ended, and rises and falls are dealt with by selling. In the adjustments that occurred in September 2024 and April 2025, sales by long-term traders also increased near the stage bottom - this can be understood as a cleansing of long-term traders who have relatively weak will. In the context of a major structural transformation of the market, is this increasing selling pressure a cleansing of these people, or a correct decision to completely extinguish the bull market cycle? In terms of magnitude, this 21% drop is still within the normal range of pullback in this cycle (around 30%), but the price has fallen to many key technical indicators, such as the 360-day moving average and the lower edge of the ascending channel trend line. Technically, this bull market of BTC has reached a critical moment. The results will be presented in one to two weeks. Or, with the government restoring operations and liquidity flowing back, it will rebound again (the end of the old cycle will require more time in the market to confirm); or even if liquidity is restored, the returning funds will be difficult to withstand the selling pressure, and the BTC price will quietly enter the next stage of the old cycle - the "decline period" (bear market). According to eMerge Engine, the EMC BTC Cycle Metrics index is 0, which is in a transition period.