Freshly released soft CPI data contributed to a bit of a recovery in the price of Bitcoin.
But, while the bears appear to be in a ceasefire for now, the market is still in a state of uncertainty regarding the next move.
Under normal circumstances, lower than expected CPI data usually triggers a much more pronounced move especially in the price of Bitcoin.
This time it appears rather subdued, perhaps a reflection of the gloomy state of the market.
The subdued reaction points to the prevailing concerns that the market could continue to take a beating from the bears.
According to recent data, some Bitcoin investors have recently started selling at a loss.
Such a scenario historically occurred when investors anticipated more bearish performance.
The fact that the price of Bitcoin just came off a historic peak in January suggests that the peak earlier this year was potentially a mid-cycle top.
In this case, it could be a while before it retests the same levels.
Declining Venture Capital Presence in the Segment Raises Concern
Bitcoin has experienced an overall downtrend in the last few weeks as sell pressure intensified.
The bearish market conditions have resulted in declining institutional investor interest.
Bitcoin ETFs have been experiencing heavy outflows, confirming strong bearish sentiment.
However, they were not the only important institutional class of investors that have recently been exiting the market.
Recent data also revealed that venture capital investors have recently been afraid to dip their toes in the market.
VC funding has reportedly dropped to levels last seen before 2018.
While venture capital may not necessarily benefit the price of Bitcoin, the weak investment offers perspective as to how much the market has cooled.
Will Trump’s Protectionist Policies Continue to Hammer Down on Bitcoin?
U.S President Donald Trump and his administration made it clear that they are pro crypto.
However, the recent tariff wars have greatly contributed to deteriorating investor sentiment.
If Trump maintains this aggressive stance, then there is a chance that the price of Bitcoin could continue to drop.
The highly anticipated major rally of 2025 for price of Bitcoin may thus be downplayed.
Retaliatory tariffs from other countries could make it harder for the U.S to combat inflation and thus interest rates may not come down soon.
This means liquidity flows into crypto may be restricted. On the other hand, the prospects of Bitcoin reserve in the US could revive those hopes.
In addition, many might treat the bearish price of Bitcoin as an opportunity to accumulate at discounted prices.
A strong recovery could potentially be on the cards if the market conditions and sentient improve.
