Bitcoin: what's next?

Bitcoin has experienced a significant pullback since its recent highs in early 2025, dropping from a peak of $102,082 on January 20, 2025, to around $86,064 as of March 1, 2025. Several factors have contributed to this decline, reflecting both market dynamics and broader economic influences.

One primary reason is profit-taking following Bitcoin’s rapid ascent past $100,000. After reaching its all-time high, many investors likely cashed out to secure gains, a common behavior after such rallies. This is supported by historical patterns where Bitcoin tends to see sharp corrections often 10-20% or more after hitting new highs, as traders lock in profits and short-term speculative interest wanes.

Another key factor is macroeconomic uncertainty. Early 2025 saw shifting expectations around U.S. Federal Reserve policies, with indications that anticipated interest rate cuts might be delayed due to persistent inflation concerns. Higher interest rates or a pause in rate cuts typically reduce appetite for riskier assets like Bitcoin, as investors pivot toward safer options like bonds. This sentiment was compounded by global trade tensions, which may have prompted broader market sell-offs, indirectly pressuring Bitcoin.

Institutional activity has also played a role. While institutions like MicroStrategy continued to accumulate Bitcoin (adding 20,356 BTC in early January), there have been signs of outflows from Bitcoin exchange-traded funds (ETFs). After significant inflows of $978 million on January 6, 2025—the highest since November 2024—recent weeks saw reduced ETF activity, with some reports of net outflows. This suggests institutional investors may be rebalancing portfolios or taking profits, adding downward pressure.

Additionally, market-specific events have contributed. A notable incident was the Bybit exchange hack in late February 2025, which sparked fear and an overreaction in the market, despite Bybit’s assurances of solvency and $16 billion in reserves to cover losses. This event, alongside a lack of fresh bullish catalysts (e.g., no immediate progress on a U.S. strategic Bitcoin reserve), eroded the momentum that had driven Bitcoin past $100,000 in December 2024 and January 2025.

Finally, technical factors and market sentiment have amplified the pullback. Bitcoin’s failure to hold above key psychological levels like $100,000 led to increased selling by short-term traders5. Posts on X and technical analyses highlight declining trading volume and broken support levels (e.g., January lows around $89,000), signaling weakened bullish momentum.

The broader crypto market also saw altcoin crashes, further reflecting general anxiety and profit-taking across the sector.

In summary, the current Bitcoin pullback since its recent highs stems from a mix of profit-taking after a strong rally, macroeconomic headwinds, fluctuating institutional involvement, specific crypto market incidents like the Bybit hack, and a fade in bullish sentiment. While these corrections are not unusual, Bitcoin historically experiences multiple 20-30% pullbacks in bull markets. The convergence of these factors has driven the price down by approximately 16% from its January peak as of March 1, 2025.

By: António Costa, Alcral AG Head of Global Investments