Bear or Bull? The possible factors driving Bitcoin’s latest dips

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Bitcoin appears to be on another rollercoaster. In the latter half of 2024, the price of Bitcoin soared to $100,000. Although market corrections took the price down, it appeared robust entering 2025. Just as investors were celebrating this bull run, the price took another shocking dip at the end of February and has continued to fall in early March.

As investors reel over the precipitous drop, experts are speculating: Does this mark a new bear cycle, or is the bull run still going? Bitcoin has historically demonstrated a high degree of volatility, even during its bull cycles. However, the crypto sphere is entering uncharted waters, with financial and regulatory authorities embracing Bitcoin on a broader scale than ever before. Understanding the movements of the latest Bitcoin price mandates consideration of both its historic influencers and the emerging factors driving these new ups and downs. 

The Role of Supply and Demand

Since its inception, Bitcoin was planned to have a fixed supply. As the supply of Bitcoin tokens reaches this peak, demand for Bitcoin could rise, as well as the price. “Whales,” or individuals holding large assets of Bitcoin, also play a major role in Bitcoin demand. When whales maintain their assets, this is taken as a favorable sign for the Bitcoin market, driving prices up. Alternatively, during large sell-off events, both demand and price for Bitcoin can drop.

The Role of Bitcoin Mining

The function of Bitcoin relies on the blockchain technology on which the cryptocurrency was founded, and transactions for the blockchain are powered by Bitcoin mining. Bitcoin mining is the process by which transactions are validated on the blockchain through the generation of a cryptographic solution. Miners who reach the solution first are awarded in the form of Bitcoin tokens and fees. This practice is set to continue until the set limit of 21 million Bitcoins are circulating.

Another aspect of Bitcoin mining is the planned halving events, in which rewards for Bitcoin mining are cut by 50%. While this cools the competition for Bitcoin mining, halving events have had a historically positive correlation with the price of Bitcoin. Halving events take place every four years, with the latest halving event taking place in 2024 before Bitcoin’s latest bull run.

The Greater Market Influencers

Although cryptocurrencies function within a decentralized financial structure, negating the need for banks or clearing houses during transactions, they are not isolated from greater market influences. Just as economic conditions such as inflation and interest rates can affect other forms of equity, as in with stock prices, the price of Bitcoin remains vulnerable to market sentiment. 

The recent downswings in Bitcoin have come during uncertain economic times, in which the Dow has dropped precipitously. These uncertainties may cause investors to liquidate their assets. Furthermore, Bitcoin has obtained a unique status as a cryptocurrency with greater financial and regulatory acceptance, which may tie the price of Bitcoin even closer to movements in the market.

The Effect of the Regulatory Environment

Part of Bitcoin’s rise to mainstream status in 2024 was its greater acceptance and validation by global regulatory and governmental bodies. As a relatively new form of digital currency, some investors remained skeptical of its reliability as an investment asset. However, as governments explored the strategic use of Bitcoin as a reserve and retailers began implementing tokens in transactions, sentiment toward Bitcoin warmed.

The initial embrace of Bitcoin by regulatory authorities, particularly in the U.S., was initially heralded as a boon for investors. The recent downturn has cast doubt on this development, with some fearing the effect of new laws and regulations. 

The Future Price Outlook

In the wake of shifting markets and regulatory developments, Bitcoin continues to demonstrate the price volatility it has become infamous for. The opinion of experts remains split, with some arguing that Bitcoin demonstrates multiple price dips during a bull market and that prices will continue their upward trajectory. 

While it is true that the overall trajectory of Bitcoin’s price remains robust, the uncertainty of future market predictions makes it impossible to say for certain where the ceiling lies. Investors still hoping to capitalize on these movements should keep a close eye on the latest Bitcoin price and consider the cryptocurrency’s unique position in today’s global economy.

ADVT.

This article is brought to you by OKX.

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