In May 2025, Bitcoin's price strongly broke through $110,000, refreshing historical highs again, breaking the oscillation pattern that had persisted since December 2024, reigniting market discussions about whether 'the bull market is returning'. From the FOMO sentiment sweeping social media to the institutional funding support under sustained net inflows of ETFs, and to the gradual warming of on-chain indicators, is this wave of market action the beginning of an upward trend continuation or the end of a false rally? Is it a replay of history or the beginning of a new cycle? We attempt to provide a more profound analytical perspective on the current market landscape through multi-dimensional data analysis, historical comparisons, and sentiment interpretation.
Is history repeating itself? The shadow of the double top looms large.
Looking at the past three complete bull-bear cycles of Bitcoin, they all exhibit similar structural characteristics: halving catalyzes supply-demand imbalance, leading to price increases; exuberant sentiment drives prices to peak quickly; policy or macro disturbances confirm the top, entering a deep adjustment.
Taking 2021 as an example, Bitcoin was stimulated by the listing of Coinbase, loose policies, and institutional embrace in April of that year, breaking the $60,000 mark for the first time. Subsequently, in May, it plummeted by 50% due to the crackdown on mining farms in China and expectations of Federal Reserve policy. However, a few months later, under the boost of El Salvador adopting Bitcoin as legal tender and ETF expectations, the price surged again and reached nearly $70,000 in November, forming a clear 'double top structure'. This structure quickly reversed, marking the beginning of a bear market.
The current market has once again reached previous highs, leading many investors to worry whether a similar 'double top' will reappear. From a structural perspective, this wave of movement indeed shares certain similar characteristics with 2021—both involve breaking through after oscillating at previous highs, and both have strong macro narratives and capital pushes. However, the key difference lies in the significant changes in market structure and funding composition.
The structure has changed: ETF funds have become the leading variable.
In 2021, the main drivers of the bull market were retail sentiment and traditional structural funds such as Grayscale Trust (GBTC), while the biggest difference in the 2025 rally is that ETF funds and institutional subscriptions have become the core variables driving the market. As of mid-May, the total assets of U.S. spot Bitcoin ETFs have surpassed $50 billion, with daily net inflows frequently reaching new highs, and leading asset management companies like BlackRock and Fidelity continue to increase their positions, indicating strong structural bullish intent.
This change in funding structure means that the logic of price fluctuations is also changing: from the past irrational volatility dominated by emotions to a more disciplined trend of institutional capital entering the market. This may explain why in this round of increases, Bitcoin's pullback has been smaller, its rhythm steadier, and its sentiment warmer and more orderly.
However, this also means that once these funds stop flowing in or even start flowing out, the market may face a steeper reversal. This 'leveraged stability', while pleasing, also conceals fragility.
On-chain data releases complex signals: top pressure gradually emerges, bubbles have not reached their peak.
From on-chain data, the current Bitcoin market is in a delicate phase: some indicators suggest the market has entered a high position, but it has not yet reached the ultimate bubble stage.
For example, Glassnode data shows that the MVRV of long-term holders has approached 3.3, nearing the historical high red zone (above 3.5), indicating that many early entrants are in a state of significant unrealized gains and are beginning to gradually release their holdings; while the MVRV of short-term holders has also risen to 1.13, showing that short-term speculators have basically entered the profit zone, creating short-term profit-taking pressure.
However, on the other hand, from indicators like the 'sell-side risk ratio', the concentrated selling pressure in the market has not yet emerged. Most long-term holders have not started to distribute their holdings significantly, and the overall cashing-out willingness is within a controllable range, making the current situation more like a preliminary stage in the process of constructing a top, rather than a terminal signal.
Combining indicators such as Liveliness, SOPR, and on-chain trading volume, we find that current activity, while gradually warming up, has not yet entered the 'irrational exuberance' stage. This means that although prices have entered historical high territory, compared to the madness at the end of previous bull markets, the market state has not yet reached the 'ultimate bubble'.
Macroeconomic environment: Policy direction is uncertain, and dollar liquidity is a key variable.
In addition to the structural and funding-driven factors of the market itself, another key factor influencing Bitcoin's price movements is the changes in macro policies and global liquidity.
In the first half of 2025, although the Federal Reserve maintains high interest rates on the surface, facing the dual pressures of falling inflation and slowing economic growth, expectations for interest rate cuts gradually rise. At the same time, the U.S. government has frequently pressured Powell to 'cooperate with the market' ahead of the election, further fueling the imagination of a return to loose monetary policy.
In this context, Bitcoin's nature as a liquidity-sensitive asset is further strengthened. As long as the Federal Reserve clearly signals liquidity easing or ETFs continue to receive fund subscriptions, there is still a foundational upward space in the market. However, if inflation rebounds or geopolitical conflicts escalate leading to policy tightening, the market may quickly give back gains.
Additionally, the escalation of the China-U.S. trade war in 2025 also poses potential bullish factors. On one hand, it drives some risk-averse capital into the crypto market; on the other hand, the trend of de-dollarization accelerates, leading Bitcoin to be viewed by some countries as an 'alternative reserve option', providing macro support for prices.
Market outlook: A pullback after a surge is inevitable, but the main line of the bull market remains intact.
In summary, while Bitcoin's breakout above $110,000 has released strong bullish signals, the current market appears more like a test of the upper boundary of a high-level oscillation zone rather than genuinely entering the ultimate bull market climax based on on-chain behavior, structural indicators, or macro sentiment.
In the short term, some profit-taking and technical indicator divergences may trigger a pullback, especially if indicators like MVRV continue to fail to break previous highs and liquidity tightens marginally, the market may form a short-term 'false breakout' double top structure.
However, in the medium term, as long as ETF inflows do not decrease and institutional allocations continue to advance, the long-term structural upward trend has not been damaged; rather, it is accumulating energy for a new round of offensive amidst oscillation and consolidation.
Investors should focus on the following key points at this time:
Whether there is a sharp increase in volume and price stagnation in the short term could be a top signal;
Whether the flow of ETF funds continues positively is the core variable for judging the mid-term market.
Changes in the movement of long-term on-chain holdings, whether there is centralized cashing out or re-accumulation, are leading signals for judging the transition between bull and bear markets;
Macroeconomic policies, especially Federal Reserve statements and changes in employment and inflation data, affect dollar liquidity and risk appetite.
Conclusion: The bull market has not yet ended, but the market is unlikely to 'fly with closed eyes'.
Bitcoin has once again set a new historical high, reflecting the cyclical nature of the market and the changes in global capital structure and belief. We cannot rule out the possibility of a short-term pullback, but we should not ignore that Bitcoin is gradually becoming the 'default option' in the new generation of global asset allocation.
In the new cycle, a 'frenzied bull market' driven solely by emotion may give way to a more structural, liquidity-driven 'institutional bull market'. This requires us to shift our investment strategy from the short-term impulse of 'chasing highs and cutting losses' to rational judgment based on data and structural changes.
The bull market may still continue, but the market can no longer 'fly with closed eyes'; in this game, the real winners are those investors who can see through the cycle rhythms and structural changes.
