Crypto Market Outlook: Bitcoin Braces for Bearish Cycle as Capital Flight Deepens

Crypto Market Prone to Massive Flush Amid Accelerated Capital Outflows

Written by Samer Hasn, Senior Market Analyst at XS.com

Bitcoin has officially exited its consolidation phase and entered a new bearish cycle, slumping once again below the $64,000 threshold. Altcoins followed suit with sharp declines, as Ethereum tumbled below $1,825 and XRP retreated to $1.33.

This toxic cocktail of economic, political, and geopolitical shocks is aggressively flushing capital out of the crypto market through multiple channels. This exodus leaves significant room for bears to dominate and drive prices even lower, with buyers currently surfacing only for short-lived corrective bounces.

What Happened?

On the geopolitical front, the looming threat of a large-scale war with Iran has put investors on edge. The current U.S. military buildup is on a scale not seen since the 2003 Iraq War. According to multiple reports from the Wall Street Journal and the Washington Post, General Dan Caine, Chairman of the Joint Chiefs of Staff, has expressed grave concerns to the White House regarding potential casualties and the risk of depleting critical munitions. These preparations suggest this is no longer a mere diplomatic lever; it is a transition toward active conflict.

This theater of war sits adjacent to the Strait of Hormuz, a global chokepoint through which more than 20% of the world's oil passes. The market must now brace for various repercussions on the global supply chain. While the best-case involves minor, manageable energy disruptions, the worst-case involves a full and prolonged blockade of the Strait and strikes on regional energy infrastructure.

This poses a severe upward inflation risk, likely making Federal Reserve policymakers even more reluctant to pivot. Currently, the CME FedWatch Tool shows the market is not pricing in a 25-basis-point cut before June, and the specter of war may further lower those odds. This higher-for-longer narrative remains a lead weight on risk assets, stifling any hopes of a solid recovery.

Compounding these fears is the return of tariff-related uncertainty. According to The Journal, the Trump administration is pivoting to new Section 232 national security tariffs to circumvent a recent Supreme Court ruling that invalidated many second-term levies. These proposed tariffs target six critical industries, including large-scale batteries, industrial chemicals, and power grid equipment, while the administration simultaneously considers accelerating existing probes into semiconductors and pharmaceuticals.

This shift aims to recoup lost revenue and involves a technical revamp of steel and aluminum duties. By applying tariffs to a product’s full value rather than just its raw material component, the administration could impose significantly higher costs on corporations. As numerous surveys indicate, such trade shocks dampen growth, employment, and capital deployment.

We already saw the impact of trade-related liquidations on October 10th of last year, when nearly $20 billion was wiped out. Since then, crypto investors have struggled with a loss of confidence, prompting speculators to flee the market.

By The Numbers

These uncertainty factors are driving historic outflows across all market segments.

According to SoSo Value, Bitcoin spot ETFs recorded their largest 10-day outflow of $203 million yesterday, marking the fifth consecutive week of negative flows. Total net assets for these ETFs have been sliced in half from their peak, now sitting at $80 billion.

On the spot market, Coinbase’s on-balance volume for Bitcoin has cratered to its lowest level since November 2024.

Speculative capital is also feeling the heat. According to CoinGlass, Bitcoin futures recorded $250 million in long liquidations yesterday, the largest single-day figure since February 6th. Total crypto futures saw $523 million in long liquidations, driving open interest down to an 11-month low of $93.7 billion. This represents a staggering 60% decline from the all-time peak.

Finally, the last line of defense is showing cracks as on-chain whale accumulation falters. BGeometrics data shows that the number of addresses holding between 1,000 and 10,000 BTC is trending downward again, hitting a 40-day low of 1,927 as of yesterday. This signals a pivotal reversal: whales have transitioned from slow accumulation at lower prices to active distribution.

Given the severe erosion of liquidity and confidence, I believe the $53,000–$55,000 range is the most likely next target for the bears.

Bitcoin Technical Outlook (BTCUSD)

Technically, on the 4-hour timeframe, Bitcoin is testing the structural support of a recent Lower Low (LL) while interacting with the lower boundary of a narrowing descending channel. The price action is currently dropping below the 0.786 Fibonacci level at 66,498.23, showing a persistent bearish market structure characterized by a series of lower highs and lower lows.

This recent leg down follows a rejection from the upper dynamic resistance, as sellers maintain control of the immediate trend.

On the upside, if the asset manages a corrective bounce and breaks above the current Fibonacci resistance, buyers’ eyes may turn to the primary bearish order block (-OB) situated between 69,783.48 and 71,101.35.

Conversely, if the bearish trend continues and the current floor is invalidated, this may turn sellers’ attention toward the bullish order block (+OB) zone between 59,519.03 and 60,283.96.

The price may head lower into this major support area to seek sufficient liquidity for a potential reversal before challenging the broader bearish structure.

(Chart powered by TradingView. Charts are for educational and illustrative purposes only and may differ from live trading prices on our platform.)

Disclaimer: The chart reflects the analyst's opinion and does not constitute investment advice. Past performance is no guarantee of future returns. Seek independent advice before making decisions