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Bitcoin's Resilience: A Bullish Signal Amidst Geopolitical Uncertainty

Coin WorldTuesday, Feb 4, 2025 3:45 pm ET

1min read

Bitcoin's resilience in the face of escalating trade tensions and geopolitical uncertainty has sparked debate among investors and analysts about the cryptocurrency's potential trajectory. Following a sharp drop below $92,000 on February 3, Bitcoin quickly rebounded, demonstrating its enduring demand and market confidence.

Initially, investors braced for economic hardship due to US President Donald Trump's tariff war announcement. However, concerns shifted to whether Bitcoin had already peaked and was about to enter a downtrend. Bitcoin Archive noted that every past BTC bull market had topped within 330 days of breaking the prior cycle's all-time high, with February 4 marking day 328. Despite these concerns, Bitcoin's demand remained strong, consistently absorbing pullbacks even at historically high levels above $90,000.

Glassnode analysis of Bitcoin's bull market drawdowns suggests that demand for BTC could rise, possibly triggering the market's "second euphoric phase." Historical data shows that in the past three cycles (2011-2015, 2015-2018, and 2018-2022), corrections averaged around 25%, followed by an acceleration in price performance during the final third of the bull run. The current bull market is yet to experience such an acceleration.

On the supply side, a key metric to watch is the Long/Short Term Holder Threshold. It tracks capital rotation from long-term investors to new buyers, providing a clearer view of supply dynamics. Bitcoin cycle peaks often align with long-term holders taking profits and offloading their coins to newcomers. Glassnode data shows that this is not the case yet, with long-term holders still retaining a significantly larger share of the supply, signaling confidence in even higher prices ahead.

Additional data from Glassnode shows that the 2022-2025 cycle has closely mirrored the 2015-2018 cycle so far. However, an exact repeat is unlikely. As Bitcoin matures, each cycle's growth ratio has declined, requiring increasingly larger capital inflows to sustain new price levels. So far, BTC has risen 6x from its cycle lows of $16,000 in December 2023, suggesting an expected multiplier in the range of 10x to 13x

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