Galaxy Lowers Bitcoin Price Forecast to $120K Citing Headwinds and ETF Flows

Galaxy Revises Bitcoin Price Target

Investment firm Galaxy Digital has adjusted its Bitcoin price forecast for 2025 to $120,000, a decrease from its previous estimate of $185,000. This revision is attributed to a confluence of market headwinds, including the impact of passive investment flows into Bitcoin exchange-traded funds (ETFs) and financial institutions, which have collectively reduced price volatility.

Factors Influencing Bitcoin's Price

According to Alex Thorn, Galaxy's head of research, several factors have contributed to the downward revision. These include significant Bitcoin sell-offs by whales (large holders) who dumped 400,000 BTC onto the market in October, shifts in investment narratives towards assets like gold, artificial intelligence (AI), and stablecoins, as well as leveraged liquidations. Thorn noted on X, "Bitcoin has entered a new phase, what we call the 'maturity era,' in which institutional absorption, passive flows, and lower volatility dominate."

He further stated, "If bitcoin can maintain the $100,000 level, we believe the almost three-year bull market will remain structurally intact, though the pace of future gains may be slower."

Impact of the October Flash Crash

Thorn highlighted that the flash crash on October 10, which triggered approximately $20 billion in cascading liquidations within a 24-hour period – the largest liquidation event in crypto history – has "materially damaged" the ongoing bull trend.

Outlook on Bitcoin's Fundamentals

Despite the revised price forecast, Thorn emphasized that he remains bullish on Bitcoin’s underlying fundamentals and its long-term performance. However, the cyclical market dynamics, which have historically characterized the cryptocurrency market, have been disrupted.

Is a Bitcoin Bear Market Imminent?

Cryptocurrency markets experienced a wave of panic on Tuesday as $1.3 billion was liquidated, causing Bitcoin's price to dip below $100,000 for the first time in four months. Bitcoin's price fell below its 365-day moving average, a key dynamic support level, on both Tuesday and Wednesday, triggering concerns about sustained downward pressure and the potential onset of a new Bitcoin bear market.

The price of Bitcoin has declined by over 20% from its all-time high of above $126,000 during this market downturn.

Analyzing the Bear Market Scenario

While some market analysts define a decline of 20% or more as indicative of bear market conditions, others contend that such corrections are normal within the cryptocurrency market. Trader Lourenço VS wrote on X: "During this cycle, the typical correction signature has been between 20-25%, with a couple of 30% ones. This current correction is at 21%, totally within the normal parameters."