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, hit $76,600 on March 11, the lowest level in four months. As of March 13, it is trading around $82,600 after a 24% pullback. Amid uncertainty in the market, analysts are evaluating the future direction of Bitcoin.

MACROECONOMIC UNCERTAINTIES AND THEIR IMPACT ON BITCOIN The decline in Bitcoin is not a situation specific to the crypto market only. The global economy is following a volatile path due to trade wars and interest rate policies. Escalating recession fears in the US, Trump’s customs tariff policies, and global trade tensions negatively affect the risk perception. Particularly, tensions with Canada and the European Union create a panic atmosphere in the markets. The US imposing a 25% customs duty on steel and aluminum imported from Canada led Canada to reciprocate with the same tax rate on US goods worth $21 billion. The European Union also announced a retaliatory tariff of $28 billion, escalating trade wars to a higher level. These developments steer investors away from risks, making safe haven assets like cash, gold, and bonds more appealing. Volatile investments like Bitcoin, on the other hand, faced short-term selling pressure. Inflation data released in the US on March 12 provided a temporary relief. The Consumer Price Index for February increased by only 0.2%, reducing the annual inflation rate to 2.8%. Core inflation also dropped to 3.1%, the lowest level since April 2021. Bitcoin briefly rose above $84,000 with this data but gradually gave back its gains as the day progressed.

INSTITUTIONAL INVESTORS EXITING BTC A significant determinant in the Bitcoin market is the attitude of institutional investors. Since February 13, significant outflows have been observed from spot Bitcoin ETFs. The worst blow came on February 25 with an outflow exceeding $1 billion, which clearly demonstrated institutional investors’ tendency to avoid risks. As of March 12, BlackRock’s IBIT fund still holds the largest ETF in the market with 568.000 BTC. Fidelity’s FBTC fund has 197.500 BTC, and Grayscale’s GBTC fund holds 196.000 BTC. Another aspect of the Bitcoin narrative with a political dimension is that at least six officials in the Trump administration directly or through ETFs own BTC. Health and Human Services Secretary Robert F. Kennedy Jr. has a Bitcoin investment ranging from 1 to 5 million dollars, while Treasury Secretary Scott Bessent is known to have invested between $250,001 and $500,000 in BlackRock’s Bitcoin ETF. Bessent announcing that he would liquidate this position within 90 days highlights the connection between the government and the crypto markets. WHAT DO THE TECHNICAL DATA SAY? The level of open interest (OI) in the Bitcoin futures market also provides significant signals about investor behavior. The open interest, which exceeded $70 billion on January 22 when BTC reached its all-time high, declined to $45.7 billion by March 11 as Bitcoin fell. However, in the last two days, open interest re-boosted and exceeded $1 billion as of March 13. This indicates that some investors have cautiously started re-entering long positions. Technical analyst CryptoCon points out that Bitcoin has historically reached its lowest levels on the Relative Strength Index (RSI) Bollinger Bands. Previously, these points have generally formed a bottom for BTC and have been followed by a recovery. CryptoCon reminds that similar cycles occurred in 2013, 2016, and 2020, with BTC reaching new highs within 9-12 months after a correction. According to him, Bitcoin’s current situation is reminiscent of March 2017, and new highs may be possible in the long term. However, this optimistic view is not shared by all analysts. Analysts like Doctor Profit focus on two different scenarios for Bitcoin’s direction:

Dip at $68,000 – $74,000 Level:
The Market Value/Realized Value (MVRV) indicator shows that BTC has formed a strong bottom at these levels.
Despite ongoing macroeconomic uncertainties, if BTC holds at these levels, a new rally could begin.

Black Swan Scenario:
Trump’s escalation of trade wars, global recession fears, and a potential financial crisis could push Bitcoin much lower.
If a major economic shock occurs, BTC could drop to $50,000.

CONTINUATION OF THE ROAD FOR BITCOIN:
The market is waiting to see whether Bitcoin will follow historical cycles or macroeconomic pressures will prevail. Investors should closely monitor trade wars and global economic dynamics along with long-term technical indicators. For Bitcoin to recover, ETF inflows need to return to the positive zone and open interest levels need to rise steadily. Currently, there is uncertainty in the market, and investors are advised to avoid taking extreme risks. While technical indicators may be optimistic, it should not be forgotten that the market is sensitive to external shocks.