Bitcoin's Bearish Trend Confirmed by Tether Reserve Halt, M2 Money Supply Rise

Bitcoin's market capitalization versus its realized capitalization has been trending negatively, a historical indicator of a bearish market. This trend suggests that the current bull cycle for Bitcoin may be coming to an end. The realized capitalization measures the value of Bitcoin based on the last time each coin was moved, providing a more accurate reflection of the capital flowing into the market. A decline in the 365-day moving average of the delta growth between market cap and realized cap signals a bear market, as observed since November-December 2024.

The halt in the growth of Tether's reserves further supports this bearish outlook. Tether, a stablecoin often used for trading Bitcoin, has seen a pause in its reserve growth, indicating stable rather than increasing buying power. Historically, a slowdown in Tether reserve growth has coincided with market tops, suggesting another bear market could be underway. However, it is important to note that none of the usual cycle-top metrics have reached overheated levels seen in previous cycles.

On the other hand, the global M2 money supply, which includes money market funds from major economies, went parabolic in 2025 while Bitcoin was consolidating. Historically, such divergences do not last long, suggesting a potential for Bitcoin to appreciate. The trade war initiated by the U.S. and China’s retaliatory tariffs have also dented investor confidence, affecting the crypto market. The pessimistic macroeconomic outlook due to ongoing trade wars has contributed to the bearish sentiment, with Bitcoin spot ETFs experiencing weak performance and selling pressure.

Despite the bearish indicators, the global M2 money supply's rise points towards increasing buying power in the market. This could potentially offset the bearish signals and provide support for Bitcoin's price. However, the current market conditions and the halt in Tether reserve growth suggest that investors should be cautious. The CEO and Co-Founder of a popular crypto analytics firm has stated that the bull cycle for Bitcoin is over, predicting that this bearish phase could persist for another six months. Investors should closely monitor these metrics and consider the broader economic context when making investment decisions.