Bitcoin (BTC) is once again putting investor confidence to the test as it lingers in a delicate position, hinting at the potential for an extended bear market cycle.

Amidst the current market uncertainty, industry experts and traders are analyzing the current state of the crypto market, deliberating whether the recent downturn signals more losses to come or sets the stage for a significant comeback.

Industry experts are Evaluating Crypto Market Rebound

Julio Moreno, head of research at CryptoQuant, highlighted that Bitcoin holders experienced the largest single-day loss since August 2024, amounting to a whopping $1.7 billion on Wednesday. This substantial sell-off has sparked widespread panic among traders, leading many to opt for cutting their losses as Bitcoin slipped below crucial support levels.

“Bitcoin holders experienced the largest loss today since August 2024: $1.7 billion,” Moreno pointed out.

Meanwhile, market analyst Miles Deutscher drew attention to the Crypto Fear and Greed Index, a popular sentiment indicator, which has plummeted to its lowest level since October 2024. Despite the prevailing extreme fear in the market, Deutscher believes that this sentiment could pave the way for a price reversal, hinting that Bitcoin might be on the brink of a pivotal turnaround.

“People are starting to feel anxious again. Surprisingly, that might be the catalyst for forming a bottom eventually,” he explained.

In a separate analysis, Deutscher noted that BTC exchange inflows reached the highest point of the year amid the recent market turbulence. This surge in inflows indicates that traders hurried to liquidate their holdings as Bitcoin dropped below the $90,000 milestone.

However, he speculated that such panic-induced selling could create an unexpected bounce, potentially catching those who sold off guard.

Mark Cullen, an analyst at AlphaBTC, chimed in, underscoring the role of market makers in stabilizing prices. According to Cullen, a Binance exchange market maker intervened to prevent a more severe crash, understanding that a further decline might trigger a widespread capitulation event.

“They understand that any further decline in Bitcoin could lead to a market-wide crypto crash, leaving customers with losses,” he remarked.

Despite the intervention, Cullen remains cautious, predicting a temporary rebound before the next downward movement. While he does not foresee an immediate crash, he did not rule out another drop to the $87,000 range to establish a higher low ahead of a potential recovery.

M2 Money Supply Model Points to Bitcoin Surge in March

Several experts are eyeing March 2025 for a potential bullish shift. Colin Talks Crypto, a prominent crypto analyst, drew attention to the strong correlation between Bitcoin's price fluctuations and the global M2 money supply.

His model suggests that Bitcoin's price typically reacts to liquidity changes with a lag of approximately 46 days. According to the model, Bitcoin is anticipated to witness a significant upward trajectory around March 7, 2025, though this timeline could move earlier based on recent patterns.

The decreasing lag between M2 movements and Bitcoin's response implies that heightened global liquidity might soon boost BTC prices. Although the correlation is not perfect, it has historically served as a strong directional indicator for Bitcoin price trends.

“If the M2 Money Supply model persists, Bitcoin could be poised for a recovery in early March. However, short-term volatility remains a key theme, prompting traders to brace for potential fluctuations as macroeconomic factors influence institutional sentiment,” shared StealthEx CEO Maria Carola with BeInCrypto.

Moreover, Bitcoin ETFs have witnessed significant net outflows, adding to the downward pressure. Institutional investors, pivotal in Bitcoin's climb to new highs, seem to be withdrawing funds from the market, raising concerns about potential further declines.

“This withdrawal process by institutions exerts notable pressure on the BTC rate as issuers are compelled to sell assets to meet withdrawal demands,” explained MEXC COO Tracy Jin to BeInCrypto.