Fidelity Expert Warns Bitcoin Cycle May Be Done

Recent market data suggests Bitcoin may already be entering a bear market, diverging from typical supportive macroeconomic signals. Despite a recent decrease in US CPI to 2.7%, which typically strengthens rate-cut expectations, Bitcoin's price has stalled, indicating a lack of fresh capital. This trend has led analysts like Fidelity's Jurrien Timmer to suggest that Bitcoin's four-year cycle may have ended in October, both in terms of price and time.

Evidence supporting this view includes a significant drop in stablecoin inflows, often considered a precursor to crypto rallies. Exchange inflows for ERC-20 stablecoins fell from a peak of approximately 10.2 billion in August to about 1.06 billion by late December, a decrease of nearly 90%. This collapse in 'dry powder' occurred around the same time Bitcoin reached its recent high, reinforcing the idea that distribution has replaced accumulation.

Compounding these concerns, long-term Bitcoin holders have shifted to aggressive selling. The net position change for these conviction holders turned negative shortly after the October cycle high. Daily selling volume has surged by over 1,500%, indicating a substantial increase in distribution pressure. While Bitcoin dominance has risen, this is attributed to capital flowing into traditional hedges like gold and silver, rather than a risk-on sentiment within the broader crypto market.