Bitcoin Report – March 2025

Today our Independent Research Analyst, Isaac Ho from the Ainslie Research Team brings you the latest monthly deep dive specifically on Bitcoin – including market analysis, on-chain metrics, sentiment, and technical analysis. He highlights some of the key charts that were discussed and analysed by our expert panel in the latest Beyond the Block episode and expands upon his work with some additional insights. We encourage you to watch the video of the original presentation if you haven’t already.

The MVRV Ratio serves as a vital metric that highlights the relationship between Bitcoin's realised price and its market price. This indicator proves especially valuable for evaluating whether the market is overheating or cooling off. Currently, a notable decline in the MVRV is evident, suggesting waning market interest. Historically, this metric has played a key role in pinpointing Bitcoin market lows, though its reliability as an indicator of market tops is considerably less certain. In past cycles, market peaks have been marked by euphoric surges in the Z-Score. Whether this trend will persist in the current cycle remains unclear. Nevertheless, the prevailing expectation is that market behaviour will broadly mirror previous cycles, though with less pronounced peaks as the asset class matures. While financial markets offer no certainties, a solid grasp of key metrics remains essential for recognising significant market shifts. Timing the absolute top or bottom is not imperative; instead, utilising these indicators can assist traders in navigating market cycles more effectively.

Turning to the Fear and Greed Index, a marked decline in market sentiment has been observed, with the index dropping to a low of 15—one of the lowest points recorded in this cycle. Notably, sentiment has not fallen to this level since the bottom of the last bear market. Historically, extreme fear has often foreshadowed significant upward price movements, positioning this index as a potential contrarian indicator. However, it is worth noting that sentiment metrics alone should not form the sole foundation for trading decisions.

Throughout the seven-month range, an extended period within the fear zone was evident, punctuated by several false breakdowns. As the market nears a potential weekly cycle low, a sharp spike in fear aligns with typical market dynamics. This surge often emerges as participants become convinced the cycle is concluding, prompting widespread position exits and liquidations. Such conditions, in turn, can pave the way for a potential price rebound as selling pressure eases.

The FOMO Finder is another key metric highlighted for its utility in market analysis. When the chart shows purple glimmers, it signals a heightened level of fear among market participants. Historical data reveals that substantial clusters of this purple signal have consistently preceded notable upward price movements. Given this recurring pattern, dismissing the possibility of a rebound from the current level would be imprudent.

However, for analysts to confidently predict a push towards new all-time highs, a robust reclamation of critical levels is essential. The market has recently slipped below several vital structural thresholds, meaning a significant recovery is required before any firm conclusions can be drawn.

Google Trends data reveals a pattern of steady interest, though it lacks the dramatic surges observed in previous cycles. This suggests that cryptocurrency has gained widespread recognition among the general public, reducing the frequency of searches for basic information. Nevertheless, a consistently elevated level of interest is apparent, indicating that a growing number of individuals are likely developing a deeper commitment to the space, rather than engaging solely during periods of sharp price increases. This trend is generally considered bullish, as it points to a more stable and sustained interest in the market. However, it also implies that the intense euphoria characteristic of earlier cycles may not materialise to the same degree.

Active addresses represent a crucial metric closely tracked for the insights they offer into network activity levels. This indicator serves as a dynamic tool for identifying supply support and resistance. Presently, the market is at a support level, and historically, during the later phases of a bull market, an uptick in this metric is observed as network activity intensifies. This increase reflects greater user engagement, frequently serving as an indicator of sustained market momentum.

Bitcoin funding rates serve as another essential metric for gauging market sentiment. When funding rates are positive, traders with long positions pay a fee to those holding short positions. This reflects an abundance of traders betting on price increases, and to align the perpetual market with the spot price, long traders must compensate their short counterparts. This mechanism encourages traders to adopt short positions to capture the funding rate, thereby helping to balance the perpetual and spot market prices.

The value of this metric lies in its inverse: negative funding rates, which typically indicate market lows. This pattern aligns closely with the Fear and Greed Index, reinforcing a coherent framework for pinpointing optimal market entry points.

Concerning Bitcoin market cycles, the market is nearing the timing window for a potential cycle top. This window is relatively wide, necessitating a cautious approach. As the market approaches the lighter green zone, this metric signals a gradual shift from a bullish to a more bearish perspective.

Notably, the day this metric indicated it was time to begin securing profits coincided with Bitcoin hitting $110,000, after which it declined. Looking ahead, analysts will closely track any additional breakdowns, placing greater emphasis on them as the market advances further into this zone. This vigilance will refine strategies and ensure adaptability to changing market dynamics.

Asset classes typically exhibit a clear cyclical pattern, observable across various timeframes such as daily, weekly, and macro cycle ranges. In the case of Bitcoin, it generally follows a 24 to 42-week cycle, measured from trough to trough. Recognising these cycles is vital for pinpointing potential market turning points and enabling well-informed trading decisions.

This pattern is apparent in the chart, which indicates that the market is currently within the timing window for a weekly cycle low. However, as it pertains to a weekly cycle low, there remains considerable variability in the number of days that could still qualify as a valid cycle low. Should a breakdown occur below this cycle low, it would serve as a significant warning sign, warranting close monitoring and a cautious approach.

Volume metrics reveal substantial resistance around the $90,000 region, establishing it as a pivotal level to recapture. Failure to breach this threshold could lead to the ongoing formation of lower highs, indicative of a bearish market structure. Until this level is surpassed, the market will maintain a bearish configuration on a local timeframe.

The CME gap has now been completely filled, with the price trending towards levels below the semi-gap, particularly around critical zones near the $70,000 region. Analysts find it more effective to concentrate on broader zones rather than attempting to identify precise levels. The critical factor is observing how the price behaves within these zones, particularly if it exhibits signs of a bullish reversal.

Examining market structure, analysts have designated red zones to signify bearish market conditions and green zones to denote bullish behaviour. Presently, the market resides in a red zone, where the structure displays bearish tendencies. Until this shifts, there is no basis to anticipate a trend reversal based solely on this metric. However, when factoring in additional indicators such as the Fear and Greed Index and funding rates, a more bullish outlook emerges, particularly over the medium-term timeframe. The convergence of these multiple indicators strengthens the case for potential upside in the market, making it challenging to dismiss.

It has been consistently demonstrated that Bitcoin’s correlation with the equity market, particularly the S&P 500, remains closely aligned. This is vividly illustrated by the recent pullback in the S&P 500, during which Bitcoin mirrored the movement almost precisely, suggesting it serves as a proxy for the stock market. While occasional divergences in price action occur, the overarching trend and critical pivot points typically correspond closely with Bitcoin’s behaviour. This alignment indicates that Bitcoin has not embraced the narrative of gold, which is currently surging to all-time highs.

Analysing the liquidity heat map reveals several substantial clusters of liquidity to the downside, with comparatively little to the upside, indicating a stronger downward gravitational pull. However, it remains essential to account for additional factors such as sentiment, funding rates, and timing windows associated with weekly cycle lows. At this juncture, analysts maintain a cautiously optimistic stance, awaiting a decisive reclamation of the $90,000 region to confirm a more bullish market structure.

Watch the most recent video presentation of Bitcoin Analysis: Beyond the Block where we share some of these explanations in a panel format, and join the discussion on our YouTube Channel here:

We will return with a more detailed analysis of everything Bitcoin next month, including more market analysis, on-chain metrics, sentiment, and technical analysis…

Isaac Ho
Independent Research Analyst
The Ainslie Group

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