BlackRock analysts warn that an "unprecedented" situation is unfolding... On Wednesday, Bitcoin briefly fell below the $60,000 mark, and Ethereum once dropped below the $3,300 level.

Bitcoin prices have been struggling over the past month, falling nearly 15% due to concerns about a "real correction."

The cryptocurrency market is currently grappling with multiple pressures, especially the anticipated repayment of Bitcoin to users by the now-defunct Mt.Gox exchange.

Bitcoin had set a new all-time high of over $73,700 in March but has since been trading between approximately $59,000 and $72,000.

Advertisement

QCP Capital, a cryptocurrency trading firm based in Singapore, highlighted the market's concern over this issue, emphasizing that a backlog of up to 140,000 Bitcoins should continue to exert pressure on the market, particularly since the exact repayment schedule is still unknown.

Meanwhile, according to SoSo Value data, after several days of inflows, spot Bitcoin ETFs experienced a net outflow of $13.6 million on July 2, exacerbating the negative sentiment in the market.

Furthermore, a higher long-term interest rate environment has prompted warnings from BlackRock analysts, the world's largest asset management firm, who say that an "unprecedented" situation is unfolding that could hit Bitcoin prices and the crypto market.

Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors, shared his perspective on the current market dynamics from a longer-term viewpoint in an interview.

He said, "Bitcoin may have been struggling since Mt.

Gox began repayments in July, which is a huge pressure over many years, but if I knew that one of the biggest uncertainties in investing in cryptocurrencies would disappear in July, there is reason to anticipate a strong rebound in the second half of the year."

Additionally, a research report released by CCData on Tuesday indicates that Bitcoin has not yet reached the top of the current appreciation cycle and may set a new historical high this year.

The Bitcoin "cycle" refers to the period when this digital currency rises to a record high, then falls again, entering a bear market or "crypto winter."

Since the introduction of Bitcoin, it has completed three cycles, always revolving around an event known as the halving, where the rewards for miners are halved, reducing the supply of Bitcoin in the market.

Typically, Bitcoin usually halves a few months before reaching the historical high of that cycle.

However, the current cycle is different.

Thanks to the boost from spot Bitcoin ETFs, Bitcoin first set a new record high, and then the halving event occurred.

Nevertheless, many in the market still question whether Bitcoin has reached the top of the current cycle.

CCData's report studied Bitcoin's historical price trends, indicating that Bitcoin may yet set a new high.

The company stated that historical trends show that there is always a period of price expansion before Bitcoin prices truly peak after the Bitcoin halving event, "The period of price expansion before the cycle peak could last from 366 to 548 days."

The last Bitcoin halving occurred on April 19th of this year.

CCData said, "Furthermore, we have observed that trading activity on exchanges has declined in the two months following the halving events in previous cycles, which seems to reflect this cycle.

This suggests that the current expansion cycle could further extend into 2025."

Analysts acknowledged that industry institutional participants have changed Bitcoin's previous trends in the current cycle and added that trading activity in the third quarter may be low, which in turn could imply more "sideways" movement.

CCData stated, "However, the data and previous trends are strong enough to suggest that any sideways movement is temporary, and we could break through the previous historical high before the end of the year."

The company's report said that the upcoming launch of spot Ethereum ETFs in the U.S. and other similar products around the world "is destined to bring more capital, liquidity, and demand to the asset class."

CCData highlighted another key historical data point supporting its argument, stating that Bitcoin's price appreciation occurs in a short period of time.

For example, in the 2012 cycle, 91.4% of the overall price increase from the halving to the record high occurred in the four months before the cycle peak.

In the 2016 and 2020 cycles, Bitcoin's price increased by 78.8% and 71.5%, respectively, in the four months before hitting record highs.

CCData said, "In the current cycle, this parabolic expansion has not yet been realized."

Other commentators emphasized how Bitcoin's historical patterns have evolved.

Thomas Perfumo, Strategic Director at cryptocurrency exchange Kraken, said, "Historically, Bitcoin has peaked 12 to 18 months after the halving, which was last in April this year.

We have also not seen volatility reach previous peak highs.

Lastly, previous market cycle peaks coincided with a series of rapid historical highs, that is, setting 10 to 20 new highs in 30 days, and we have not triggered any of these signals yet."