Bitcoin’s yet again been swept along with the global macro circus. Trump’s tariffs have rattled financial markets, triggering major volatility and drawdowns in just about every market. The VIX has touched levels only seen once since the COVID panic of 2020. Mid-monday, the S&P500 was on target to see its worst three-day performance since 1987—although that didn’t actually happen in the end. Oil is at 5-year lows even though what we’re hearing is that this is mainly a supply issue, not demand. In any case, markets are rattled and uncertainty dominates conversations.

Even before the tariff troubles, Bitcoin was starting to show bearish signs. Last week, we noticed that UTXO bands were signalling bearish reversal (see below). At the same time, on-chain fees are dismal and the mempool is completely empty. Net ETF flows are mixed but down about 10% from their peak. All in all, bitcoin has come down 30% from its all time high in late January. That’s a serious correction as they go, even if it’s not exactly rare.

In other words, things are looking a bit dismal right now. However, my personal sense at this point is that we are in a similar situation as we were in 2020 and I retain a bullish outlook for the year. I’ll spend the rest of this piece making the argument for why I think that is.

Setting the stage with a macroeconomic backdrop

For those of you who remember, 2019 was a weird year. Bitcoin started out in the absolute doldrums, bottoming out just north of $3,000 after an almost 85% retrace in 2018, down from the 2017 peak of around $20,000. Then, in early 2019, rumors started milling around the possibility that a US ETF would actually get approved. Writing now in 2025—knowing what it actually took in the end—this seems almost childishly naive, but such were the times and a lot of people believed it.

By summer, bitcoin prices had recovered to $14,000—seemingly all on the basis of a possible ETF launch. This looked quite similar to the 2024 move that broke us through new all time highs. But back then, as the ETF got denied and the flows never materialised, we cooled off for several months and hovered around $10,000 as we entered 2020.

Meanwhile, weird things were happening in the macro world. The yield curve had just reversed, repo auctions failed, growth was poor, and recession fears loomed. In the 2 years before, interest rates had been hiked for the first time in a while, and markets were a bit wobbly as liquidity contracted. The good old taper tantrums. At the same time, equities were generally near or at all time highs, whenever they weren’t having a tantrum at least. But it all felt a bit unstable—there was little to no earnings growth to justify the prices, and PE ratios looked stretched.

On top of this powder keg sat bitcoin. At that point, we were only just starting to sometimes trade in line with macro events, but it was happening. However, the market around those times felt quite buoyed by politics and hopes for major inflows by completely new market entrants. We desperately wanted those ETF flows. And given how much the market rallied once those floodgates actually opened last year, the optimism was warranted.

But in the end, that was also all it was: optimism. Optimism and speculation on a possible, but hugely positive outcome. That outcome didn’t happen. Now fast forward to 2025.

This situation feels eerily similar to 2020. Here we are, having rode the actual wave of ETF flows onto new all time highs. Then, in comes president Trump, with an almost unbelievably pro-bitcoin administration. All of a sudden, there are hopes of a national bitcoin stockpile in the United States of America. For an early bitcoiner, that’s nothing short of unreal.

And what would it mean? Stupendous demand from the deepest pockets of the world: nation states. Moreover, if the game theory around absolute scarcity plays out, it might kick off a race to accumulate coins among sovereigns. These are the types of flows that would possibly lift bitcoin up towards a challenge of King Gold as the biggest independent global store of value.

So speculators took us up above the almost mythical $100,000 level. But underpinning it all again, is quite an uncertain macroeconomic picture with striking similarities to 2020. Just like then, a few years before (2022), interest rates were raised again, just quite a lot more than back then—to levels not seen in decades. This time however, inflation has also ravaged economies across the world for years, and Germany has already been in recession for years. Large scale war rages in Eastern Europe, pitting Russia against the West through a Ukrainian proxy, costing hundreds of billions. Yet still, equities have just been at all time highs, shaking off the occasional tantrums, but keeping strong, because let’s be serious, for most people, there is no alternative.

Back in bitcoin land, as the prospect of a national bitcoin reserve anywhere interesting—let alone in the most powerful country in the world—has started to wane, we’ve come off our optimistic highs and we’ve mostly been ranging in the $90k’s and later $80k’s, as the speculative fervor retreats. 

Populating the stage with UTXO bands

Now let’s have a look at one of our favourite fundamental indicators of large-scale trends in the bitcoin price—UTXO bands. We have described how to read this chart many times over the years, but even if you can’t be bothered to revisit those old articles simply notice the following: Rising bull markets tend to be accompanied by large waves in the green active band. As the bull market fades and we enter bearish territory, this wave reverses, and a new one rises in the light blue short HODL band.

Recently, we’ve seen signs of this exact reversal pattern forming. Below you can clearly see that the green band is reversing, and so is the light blue. Traditionally, this is a major bearish indicator.

However, let me guide your attention to a weird little anomaly in, you guessed it, 2020. Here too, we saw reversals like we’re seeing now, except they ended up being false signals. The other similarities is that the waves preceding them were small compared to the major bull-bear waves we generally see on the chart. This time around the preceding waves are neither big nor small, making them a bit hard to read. They don’t look like a proper bull market, but they also look bigger than the 2019 mini-bull.

The tariff troubles are the COVID panic of 2020 in miniature

What took us out of the $10,000 range in 2020 was the insanity of COVID and the prospect of lockdowns. For those that remember, oil futures actually went below zero—it was nuts. This time around things feel quite similar, although much less serious. There’s worries about global demand for just about anything that crosses borders, but not on the scale of what the lockdowns produced. 

Specifically, in bitcoin markets, we’re being pulled down from a speculative high range by the macro circus and need to find new footing. Since this is nothing like the enormous dislocation that happened to world trade during COVID, even though it is certainly a dislocation to global trade, I don’t expect things to be nearly as bad as in 2020, but the reasons why we’re struggling right now are quite similar.

What I do expect though, is that the end result might be eerily similar as well. The prospects of lockdown sent the US into its briefest ever recession in 2020. It was incredibly brief because the fiscal stimulus unleashed to temper its effects was biblical. I don’t think the stimulus will be as large this time around, nor do I think the recession will be quite as short, if it does happen, but in the end I do think we will get both. The US fiscal situation is much worse this time around, at these debt to GDP levels it is really hard to see a scenario where rates don’t come down fairly soon. A scenario where the US is paying nearly a trillion(!) dollars in interest every year from now onward just isn’t realistic in any way.

The tariffs are not serious, but their damage could be

This brings us back to the tariffs. I don’t think the tariffs are much more than a classic Trump negotiation tactic, with the potential added benefit of getting a bunch of basis points shaved off of $9t of refinanced US debt maturing this year (although that’s not looking too likely at the moment). Implementing them was a huge risk in my opinion, but one they’re clearly willing to take. The reason I don’t think they’re serious is their almost childish calculation formula, and the fact that they are levied at territories that aren’t even real countries. I think it’s obvious that no one spent much time on working them out. This all screams not serious trade policy to me.

Trump is famous for using the door in the face negotiation tactic. This is where one asks for something insane, hoping to settle for a concession that, by comparison, looks much more reasonable—even if it is something that on outset would look like a big ask. I think that’s what’s going on here. And given how much recent White House messaging is focused on trade partners coming to negotiate terms lately, I think it’s probably true.

The big questions are how long this can go on, and how much damage can be done in the meantime. In terms of how long it can go on, I suspect probably not much longer. Not because I think Trump can’t handle the political pain, but because I agree with the argument that the tariffs are unconstitutional and I think they will end up being halted by injunction. Probably soon. I also suspect Trump knows this and secretly wants it to happen so that the tariffs will go away and he can blame the courts in order to save face in front of his blue collar base.

Until then however, mayhem continues and may well trigger actual recession in the US (if it wasn’t already happening anyway). And we all know what that means.

Printer is coming

Everyone remembers what happened after the crash in 2020. Central banks were forced to step in and use the only real tool they have, the money printer. We’ve already seen other major economies set themselves up to start printing. China is desperate to protect their economy and further devalue the Yuan, with major fiscal stimulus already underway. The EU wants to print to rearm against their frienemy Russia. Germany even amended their constitution at record speed so that they could issue additional debt to build weapons. To me, the rearmament screams grift, since no one seriously prepares for war by blowing up one’s domestic energy supply or by shutting down major industries like chemicals or metals, but that’s another subject. The money will be printed regardless, that’s at least certain.

The major question however, is when the US printer comes online. As we all know, he who prints first prints best, and the US is already way behind both China and Europe, where rates have already been coming down for a while, and where the intent to engage in further stimulus is obvious. On top of the other 2020 similarities, there are also strange things going on in the bond and repo markets—both areas to which the Fed have no choice but to pay close attention.

It is no secret that Trump wants the printer turned on yesterday. He has been using his social media accounts to call on Powell to print since the election. But Powell seems unwilling to take the bait, and if Trump’s tactic is to crater markets in order to get Powell to blink I doubt it will work since the FED relies on economic data that’s often several quarters old by the time it makes it to their desks. If he were to initiate an attack on Iran while at the same time having tariffs in place things might look differently, but that would also spike oil prices—which would feed badly into CPI—so it’s not obvious that would work either. And let’s hope this isn’t actually on the table.

Whether a recession is coming or not, markets are already anticipating 4 rate cuts by year end, up from 2 when Trump took office. If a recession hits, we’ll probably get more and larger cuts than if not, but even if major trade partners like the EU or China tries to devalue their currencies in response to the trade war, the US might be forced to follow for fear of the dollar getting too strong to incentivise US exports and thereby jeopardising the wider reshoring effort. 

A 2020 repeat suggests Bitcoin tracks equities down, then rebounds fast

Since bitcoin is a highly liquid asset, it tends to suffer early on during large market dislocations, but then rapidly rebound as conditions stabilise. We’ve seen this several times in the past, but none more pronounced than during COVID. Back then, bitcoin fell more than 50%, but then retraced its entire fall within a matter of weeks. I don’t expect a dislocation close to that magnitude or even at that speed, but I suspect the view from afar might end up looking similar in shape at least.

But for bitcoin at least, the main event was what followed. Once the global money printer fired up, the real bull market commenced, culminating in 2021 with new all time highs. If Trump gets his way in the end—and I think he will—loosening fiscal conditions will set the stage for a proper bull cycle. Starting around the same time as the famous Fed pivot in early 2022, bitcoin has followed global M2 quite closely, with an approximate 90 day delay.

As you can see in the chart above, around 100 days ago, Global M2 started rising sharply again after having contracted during the second half of 2024. If bitcoin prices continue to follow Global M2 as closely as it has over the past three years, we could be in for a healthy bounce off of these levels.

I still hold that, so far at least, this cycle has been highly irregular and much more similar to the 2019 mini-rally than the proper cycles topping in 2017 and 2021. This is also what I believe the HODL bands above would suggest. But given the state of current on-chain data, the stakes now are quite high. If I’m wrong, it means we’re actually already in a proper bearish reversal and we should expect a significant further downturn until organic demand finds a balance with price. That would probably mean prices at least as far down as $60ks, perhaps even less.

If on the other hand I am right, all we’ve seen so far is an ETF flow-driven market rebalancing, followed by a speculative bet on sovereign flows that haven’t, and might not at all materialise. That’s entirely dissimilar to the easy-money proper bull markets of the previous two cycles, and if what lies ahead is another major macroeconomic period of low rates and money printing, then the actual bull market might not even have properly started.