History shows that Bitcoin declined more dramatically during previous halvings. To prevent further losses, crypto whales and investors are selling the cryptocurrency. Let’s discuss this topic and make a trading plan for the BTC/USD pair.
The article covers the following subjects:
Major Takeaways
- Bitcoin is lagging behind other assets.
- Whales are fleeing the crypto market.
- ETFs and crypto treasuries are facing challenges.
- Short trades on the BTC/USD can be opened with targets of $85,000 and $77,000.
Monthly Bitcoin Fundamental Forecast
This year was supposed to be a stellar one for Bitcoin. Donald Trump promised to make America the crypto capital of the world, Congress passed crypto-friendly legislation, crypto treasuries expanded rapidly, investors added digital assets to their portfolios en masse, and the flow of money into crypto ETFs continued unabated. BTC/USD bulls were mocking gold traders, believing BTC would easily surpass bullion. However, there is always a but in this imperfect world.
Performance of Bitcoin and Other Assets
Source: Bloomberg.
A 30% drop in Bitcoin from record highs was driven by increased supply amid declining demand. According to CryptoQuant, whales dumped about 815,000 tokens over the past month. Just like investors, they are afraid that it could always be worse.
In fact, the current decline in BTC/USD quotes corresponds to the so-called four-year halving cycle. In April 2024, there was a halving of the reward to miners, which essentially reduced the supply of tokens by approximately the same amount. Previous cycles included explosive rallies followed by a collapse of the cryptocurrency by more than 50%.
Bitcoin Halvings
Source: Bloomberg.
The 30% decline in BTC/USD is just the beginning. Not only crypto whales but also investors are getting rid of the digital asset. Many of them included the token in their portfolios as a risky asset that was supposed to generate profits. However, this did not happen, so now they are selling BTCs.
Investors in BTC ETFs are busy with the same thoughts. According to Glassnode, the average cost of BTC they bought is $89,600. If BTC/USD quotes slide below this level, capital outflows from exchange-traded funds are likely to accelerate, putting even more downward pressure on Bitcoin prices.
Capital Outflows from Bitcoin ETFs
Source: Bloomberg.
Crypto treasuries face even greater challenges. While Michael Saylor’s Strategy was a pioneer in the industry and has been buying digital assets for a long time, other companies have much less resilience. They desperately need to survive, and to do that, they need to start selling BTC.
Notably, the most dramatic crashes of the BTC/USD occurred due to Donald Trump’s tariffs in April and October. Does the crypto market believe the tariffs’ pro-inflationary nature will force the Fed to keep the interest rate elevated? Be that as it may, without an improvement in global risk appetite, it will be difficult for digital assets to regain ground.
Monthly BTCUSD Trading Plan
Supply growth, reduced demand, and sell-offs during the halving cycle have fueled the bearish sentiment for Bitcoin. Without a reduction in the federal funds rate in December, a significant rebound in BTC/USD quotes seems unlikely. Therefore, one can consider opening short positions with targets at $85,000 and $77,000.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of BTCUSD in real time mode
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