Bitcoin Faces Potential Cycle Top Amid Bearish Technical Indicators and Declining Network Activity

Executive Summary

Recent technical analysis and on-chain data indicate that Bitcoin's current bull market cycle may be approaching its conclusion. A significant development is the confirmed bearish Moving Average Convergence Divergence (MACD) crossover on Bitcoin's three-week chart, a signal historically associated with market tops in 2017 and 2021. This technical signal is corroborated by a 30% reduction in daily active addresses on the Bitcoin network during October, suggesting diminished on-chain demand.

The Event in Detail

Analysts are citing a confluence of factors pointing to a potential market top for Bitcoin. A primary concern is the appearance of a bearish MACD crossover on the three-week chart. This technical indicator, used to identify trend changes and momentum shifts, registered a crossover where the blue wave moved below the orange signal line. Precedent shows similar MACD signals occurred at the height of the 2017 and 2021 bull cycles, marking subsequent market peaks for Bitcoin.

Further reinforcing this outlook is the observation of a bearish engulfing candle on the same three-week chart, a pattern also seen at the peaks of the 2017 and 2021 bull cycles. These technical warnings are coupled with declining network activity. Data from Nansen reveals a substantial decrease in daily active addresses on the Bitcoin network, falling by 30% in October, from 632,915 to 447,225. This reduction suggests a decrease in on-chain demand and user engagement.

Moreover, market analysts have highlighted that 558 days post-dating the 2024 halving event may indicate that the Bitcoin bull cycle's top is imminent, drawing parallels with previous post-halving market cycle durations.

Market Implications

The convergence of these bearish indicators suggests a potential for a market correction or a phase of prolonged consolidation for Bitcoin. Such a scenario could lead to a broader impact across the Web3 ecosystem, potentially influencing investor sentiment and capital allocation in digital assets. A cooldown in network activity has also been observed on other platforms, such as the BNB Chain, where Decentralized Exchanges (DEXs) volume dropped from $6.313 billion to $2.584 billion in October, and chain revenue plunged from $787,655 to $98,294, indicating low on-chain liquidity or capital rotation.

Conversely, some analysts present a longer-term bullish case. Pseudonymous analyst Dave the Wave projects Bitcoin could reach approximately $180,000 by December 2025, utilizing the Gaussian channel trend indicator. This perspective suggests that current deep price drops could set the stage for a future rally.

Expert Commentary

Analyst Jesse Olson has been a prominent voice regarding the bearish signals, specifically identifying the pending bearish MACD crossover and bearish engulfing candle on Bitcoin's three-week chart. Olson also points to declining network activity as an additional warning that "the top is in."

In contrast, Katalin Tischhauser, Sygnum's Head of Investment Research, maintains a bullish outlook for the overall crypto market, projecting its continuation into 2025. This perspective primarily hinges on anticipated allocations from new institutional investors. Tischhauser posits that the asset class is relatively small, and engagement from large institutional players, facilitated by products like spot Bitcoin Exchange-Traded Funds (ETFs), presents a significant opportunity for steep price appreciation. This influx of "new money" is expected to generate extraordinary returns due to the asset class's strong reflexivity, where demand increases as prices rise.

Broader Context

The current market signals for Bitcoin are indicative of the complex interplay between technical analysis, on-chain fundamentals, and evolving institutional engagement. While some short-to-medium-term indicators suggest caution, the broader narrative for the digital asset space continues to be shaped by the potential for substantial institutional inflows. The launch of spot Bitcoin ETFs has significantly lowered practical barriers for traditional investors to gain exposure to Bitcoin, setting the stage for potential "demand shocks" that could propel prices higher in the long run. The market is thus presented with a dichotomy: immediate technical and on-chain bearishness versus long-term bullish catalysts driven by new capital.