[May 2025 Current Affairs Commentary] Bitcoin has once again become the market focus, with prices briefly breaking historical highs, soaring to the $110,000 mark. However, despite the bullish sentiment, market experts and on-chain data analysts have raised alarms: the current upward trend may be difficult to sustain, and a significant correction could be imminent.
It's cold at the top: technical indicators and historical patterns.
From a technical perspective, Bitcoin's Relative Strength Index (RSI) is currently approaching the extremely overbought zone, indicating signs of overheating buying momentum. Historical data also shows that whenever Bitcoin breaks through significant round numbers, especially when reaching psychological highs like $110,000, it is often followed by a 10% to 30% pullback. The trends in 2017, 2021, and mid-2024 all provided similar warning signals.
The blockchain analysis platform Glassnode also pointed out that long-term holders are quietly transferring assets to exchange wallets, which usually indicates a preparation to cash out. Additionally, leveraged trading activity has also significantly increased, making the market more fragile and susceptible to a chain reaction of 'liquidation cascades' under sudden negative news.
Macroeconomic risks are brewing.
In addition to technical aspects and on-chain data, global macroeconomic risks cannot be ignored. The US Federal Reserve (Fed) has recently signaled the possibility of interest rate hikes, coupled with rising US Treasury yields, which may lead to capital flowing out of risk asset markets back into traditional safe-haven instruments. Geopolitical instability and unresolved inflation pressures further exacerbate investors' sense of uncertainty.
In this situation, even if Bitcoin performs strongly in the short term, market sentiment may already be approaching its limits. Once panic selling occurs, it may only be a matter of time before prices fall below the $100,000 mark.
Investors must remain vigilant.
For those who have not yet entered the market, the risk of chasing highs at this stage is extremely high; for investors who already hold Bitcoin, it is even more crucial to consider whether to gradually reduce positions, lock in profits, or at least set strict stop-loss strategies. Although Bitcoin's high volatility is attractive, it also means that a single misjudgment could lead to a significant shrinkage of assets.
In the investment market, greed is often a precursor to bubbles. At this moment, maintaining rationality and alertness is the only way to avoid becoming the last person holding the bag.
