Massive Crash – Is This the Beginning of the End for Bitcoin? What to Watch Out For

One might get the impression that Donald Trump made sure that the discussion about the possible the end of the Bitcoin cycle tightened even further. On October 4, exactly 1424 days had passed since the previous peak on November 10, 2021. From the peak on December 17, 2017, to November 10, 2021, 1424 days had also passed, which for those analyzing cyclical patterns could mean the beginning of the end of the cycle. Why "could"? Because 1474 days had passed from December 4, 2013, to December 17, 2017, which is 50 days more. This, in turn, sets the second, later end date for the cycle – November 19, 2025.

Position Liquidation Cascade

The early date has already been reached, and last weekend's events could argue that the end of the cycle has already occurred or is very close. It could be argued that Donald Trump's tweet, which triggered a general "risk off," pushed one cryptocurrency market domino too far, triggering a cascade of position liquidations and deleveraging. In the current situation, if someone thought the cycle was over, there is no reason to complain – Bitcoin price has risen almost 700% since the 2022 cyclical lowHowever, if someone is hoping for a second end-of-cycle date or a complete detachment of Bitcoin from its previous dependencies, they will also find something for themselves.

For months, Bitcoin has had a strong correlation with real interest rates in the US. Real interest rates—the Fed rate minus inflation—are a kind of barometer of risk appetite. The higher the real rate, the lower the risk appetite (because real interest rates are higher), and the lower the rate, the greater the risk appetite (because real interest rates are low). Therefore, the interest rate cuts that the Fed is likely to make and the possible increase in inflation at the end of the year could lead to a sharp decline in real rates, which could push capital towards riskBitcoin could be the beneficiary of this, Ethereum or heavily overvalued altcoins.

From this perspective, the cycle is not over yet and may continue until at least the second date – November 19, 2025 – because the market may not have yet priced in the fall in real rates, and besides, they have not actually fallen yet.

Where might risks lie and what should you pay attention to?

It is important to remember that BTC is a highly speculative asset (at least for now), dependent on risk appetite. This appetite is driven by several factors, including the dollar and the spread of corporate bonds in the US.And this is where significant changes have occurred recently. The dollar hasn't weakened yet—it's fallen below 1,1600 per euro—and the corporate bond market has become volatile following the collapse of First Brands, which defrauded its creditors and left a gaping hole in its balance sheet of several billion dollars. On this news, the share price of investment bank Jefferies fell by almost 30%.

It's also worth paying attention to this market, as corporate bonds and their spreads have a real impact on corporate financing in the US. Any problems with new financing rounds or debt rollovers could turn into a problem not only for those who lent money to these companies, but also for the real economy in which they operate. Any tightening of financial conditions—in this case, through the dollar or corporate bond channels—has generally not been favorable for Bitcoin. To better inform the later end of the cycle, the situation in the corporate debt market must stabilize, and the dollar should ideally begin to weaken again, given the current correction.