Why is Bitcoin Dropping?

Bitcoin Price Decline & Bear Market Analysis - A Detailed Breakdown

Key Concepts:

• Bear Market: A prolonged period of declining prices, typically 20% or more.
• Cycle Length: The duration of a complete bull and bear market phase in Bitcoin.
• Euphoria vs. Apathy: Market sentiment – euphoria represents excessive optimism, while apathy indicates lack of interest.
• Global Net Liquidity: A measure of worldwide liquidity derived from central bank balance sheets.
• Post-Halving Year: The year following a Bitcoin halving event (approximately every four years).
• 200-Week Moving Average: A technical indicator used to identify long-term trends.
• M2 Money Supply: A measure of the money supply that includes cash, checking deposits, and easily convertible near money.
• Rotation (in investing): Shifting investments from one asset class to another.

---

I. Introduction & Context

The video analyzes the recent decline in Bitcoin’s price and argues for the likelihood of continued downward pressure. The speaker positions this decline within the context of a broader bear market, challenging the prevailing bullish narratives of a “super cycle” or delayed altcoin rally. Resources are offered for further research: a free report available at benjamincan.com (under Reports > Crypto Macro Risk Memo) and a premium subscription service at intothecryptoverse.com, providing access to more frequent and in-depth analysis, along with charting tools. The report, initially published on January 15th when Bitcoin was around $97K, details the speaker’s bearish outlook.

II. Cycle Length & Bear Market Timing

The primary argument for a bear market stems from the length of the current cycle. The speaker asserts that the recent cycle, peaking in October 2025 (Day 1,62), lasted approximately the same duration (59 days) as the previous two cycles (1,068 days and 59 days). This suggests the cycle has completed its bullish phase and transitioned into a bear market.

A key observation is the consistent timing of bear market beginnings: Q4 of the post-halving year or post-election year. Historical examples cited include Q4 2013, Q4 2017, Q4 2021, and now Q4 2025. The speaker dismisses the argument that the lack of an altcoin rally invalidates the bear market thesis, stating that Bitcoin is not responsible for altcoin performance.

III. The Role of Market Sentiment: Apathy vs. Euphoria

The speaker emphasizes that Bitcoin topped not on “euphoria” (excessive optimism) but on “apathy” (lack of interest). This distinction is crucial because topping on apathy results in a slower, more gradual decline compared to a euphoric peak. This is because the decline is driven by time-based capitulation (selling based on holding period) rather than panic selling triggered by significant price drops.

The speaker draws a parallel to 2019, the only other instance where Bitcoin topped on apathy. In 2019, there was also no significant rotation into altcoins, mirroring the current situation. This comparison is presented as a strong indicator of a similar bear market trajectory.

IV. Monetary Policy & Global Net Liquidity

The analysis extends beyond traditional technical indicators to incorporate monetary policy. The speaker highlights a correlation between Bitcoin’s peak and the expansion of the Federal Reserve’s balance sheet. Specifically, Bitcoin topped a couple of months before the Fed’s balance sheet began to expand, similar to the pattern observed in 2019.

Crucially, the speaker advocates for monitoring “global net liquidity” – the combined balance sheets of major central banks (Fed, Japan, China, UK, ECB) adjusted for reverse repurchase agreements and the Treasury General Account (TGA) – rather than solely relying on M2 money supply. He argues that Bitcoin tends to top before M2 peaks. The current situation mirrors 2019, with declining net liquidity coinciding with a stalling Bitcoin price while the stock market continues to rise.

V. Comparison to 2019 & Projected Timeline

The speaker repeatedly emphasizes the similarities between the current market conditions and those of 2019. Both periods featured a lack of euphoria, no altcoin rotation, and a decline in Bitcoin coinciding with a stable or rising stock market. The current downturn is described as a “slow, steady decline” akin to the 2019 bear market, characterized by “slightly lower lows and slightly lower highs.”

Based on historical patterns, the speaker projects a bear market duration of approximately one year, potentially extending to October 2026. This projection is supported by the observation that MicroStrategy’s previous bottom took 98 weeks from its February 2021 high, which aligns with an October 2026 timeframe.

VI. Stock Market & Metals Considerations

The speaker addresses the potential for a rotation from stocks into Bitcoin. He argues that in a “risk-on” environment with excess liquidity, crypto performs well. However, in a “risk-on” environment without excess liquidity, crypto can decline even as the S&P 500 rises. He notes that in 2019, the stock market continued to climb even after Bitcoin stalled.

Regarding a potential rotation from metals into crypto, the speaker cautions against this strategy, citing a historical inverse correlation: when gold drops 1%, Bitcoin often falls 6%. He suggests that waiting for metals to decline before entering crypto is likely to result in greater losses for Bitcoin.

VII. Technical Analysis & Future Expectations

The speaker anticipates that Bitcoin will likely revisit its 200-week moving average, a common occurrence every few years. He believes that a sustained recovery requires weakness in the stock market to stimulate a return of liquidity. Until then, Bitcoin is expected to continue its downward trend against the stock market.

VIII. Conclusion

The speaker concludes that Bitcoin is likely in a bear market that began in October 2025 and could last until October 2026. This assessment is based on cycle length analysis, market sentiment, monetary policy indicators (global net liquidity), and historical comparisons to the 2019 bear market. He reiterates the availability of a detailed report at benjamincan.com and encourages viewers to subscribe to Into the Cryptoverse Premium for more in-depth analysis.