Bitcoin (BTC) and the broader cryptocurrency market have been caught in sharp swings following the release of hotter-than-expected economic data, which reignited inflation fears and triggered widespread corrections.
Despite the volatility, Bitcoin appears to be following a familiar historical cycle that could signal the start of a new bullish leg, potentially driving its price toward $125,000 in the coming months.
Bitcoin mirrors past cycles, signaling a breakout
Notably, an analysis by TradingShot highlights striking similarities between Bitcoin’s current consolidation and past cycle movements.
The cryptocurrency has been trading sideways since hitting a double all-time high (ATH) in December 2024 and January 2025, a familiar pattern to the December 2023 to January 2024 consolidation that preceded a strong rally.
The analyst noted that Bitcoin’s January 2025 low was priced on a higher highs trendline that originated from the November 2021 and April 2021 cycle tops.
A similar trendline held Bitcoin’s January 2024 low, which subsequently triggered a strong rally in February and March 2024.
Assuming the current low holds, BTC should kick-start its 2025 bullish leg at any moment, with the price trajectory aiming for the higher highs trendline of the current bull cycle.
If momentum builds as early as this week, analysts see BTC on track to reach at least $125,000.
Bearish pressures: ETF outflows and retail capitulation
While historical price patterns indicate a bullish setup, ETF outflows and declining retail participation remain key bearish factors.
On February 12, Bitcoin ETFs saw over $251 million in net outflows, marking the third consecutive day of negative flows and bringing the total to $494 million, according to Farside Investors data.
Meanwhile, on-chain metrics suggest growing retail capitulation. Data from Santiment reveals that the total number of non-empty Bitcoin wallets has dropped to 54.44 million, its lowest level since December 10.
📊 Even with cryptocurrencies like Ethereum and XRP continuing to see their networks grow with more and more wallets, the same is not true for Bitcoin. Crypto’s top cap has 277.24K LESS non-empty wallets than it did 3 weeks ago.
The decline appears to be primarily due to small… pic.twitter.com/V2rJWDnaY9
— Santiment (@santimentfeed) February 12, 2025
This marks a loss of 277,240 wallets in just three weeks, a sign that small traders are exiting the market out of fear of further downside.
Macroeconomic pressures could delay a breakout
Beyond technical indicators, macroeconomic concerns continue to cast a shadow over Bitcoin’s short-term price action.
The latest Producer Price Index (PPI) figures, released on February 13, came in higher than expected at 0.4% month-on-month and 3.5% year-on-year, respectively.
The data further dims hopes for near-term Federal Reserve rate cuts, keeping pressure on risk assets, including Bitcoin, though BTC saw a brief uptick following the release.
According to the CME Group’s FedWatch Tool, traders now see just a 2.5% chance of a 0.25% rate cut at the Fed’s March meeting. The hawkish stance has fueled investor caution, adding uncertainty to Bitcoin’s near-term trajectory.
Bitcoin key levels to watch
As Bitcoin hovers near crucial price levels, market watchers are eyeing key resistance and support zones.
According to crypto analyst Ali Martinez, Bitcoin’s most important resistance level currently stands at $97,530. A decisive break above this level could signal renewed bullish momentum, supporting Bitcoin’s attempt to reclaim higher highs.
However, on the downside, support below $92,110 appears weak, with a notable gap between $90,000 and $70,000. This suggests that if BTC loses the $92,110 level, it could experience heightened volatility, potentially leading to a sharper correction.
As Bitcoin hovers around key technical zones, traders remain cautious, balancing bullish cycle expectations with macroeconomic uncertainties that could prolong the consolidation phase.
Featured image via Shutterstock
