According to analysts, Bitcoin investors could see their comeback in the second quarter of 2025 if BTC continued its historical correlation. Despite this rocky start to the year, Wall Street is optimistic about the potential for a post-march rally.
Bitcoin (BTC) has fallen 14% since the start of the year, roughly 26% below its January record high. The cryptocurrency market was volatile. This is because President Donald Trump’s tariff threat rattles wider financial markets. However, BTC has stabilized around $80,000 this week, raising questions as to whether this is an opportunity for purchases or a sign of further declines.
Analysts point to two key metrics that could indicate a Bitcoin recovery. It is a positive correlation with global money supply growth (M2) and an inverse correlation with the US Dollar Index (DXY).
“Bitcoin consistently kicked out the reverse DXY with about 10 weeks of delay,” wrote Christopher Harvey, an equity analyst at Wells Fargo, in the report. He suggested that the recent pullback had a slow response to a strong dollar environment in the fourth quarter of 2024. However, since DXY peaked on January 13th and weakened since then, this could create a more favorable environment for Bitcoin in the future.
Compass Point analyst Ed Engel reiterated this sentiment and highlighted the role of global fluidity. “The Global M2 has historically led BTC prices in about three months,” Engel wrote in a memo on Monday. “As global liquidity started to run out in early 2025 and begin to recover, we saw even more weakness in March before the big rallies in the second quarter.”
Despite the struggle in the crypto market, the industry is experiencing an increasingly favorable political environment. The current US Congress primarily supports cryptography, and the Trump administration has made an important commitment to fostering an industry-friendly regulatory environment. However, clear regulatory guidelines for crypto companies remain elusive and uncertain for investors.
Meanwhile, global economic concerns continue to show weight in the market. The ongoing trade war and its impact on stocks is weighing heavily on investors’ sentiment despite positive inflation data.
Analysts at Wolfe Research are cautious about short-term breakouts. “We are seeing significant breaks in key support levels,” the company said in its report. “This is not an action of the group preparing the meeting. Instead, we are afraid of a transition into a period of sustained weakness.”
A break in the $91,000-$92,000 range could provide short-term relief as the $90,000 threshold in 2025 is a key support level for Bitcoin, according to a Wolfe study.
*This is not investment advice.
