Why Talk About the Bitcoin Bubble Now?
The phrase “Bitcoin bubble” resurfaces every cycle, yet 2025 feels different. Liquidity is abundant, ETF inflows continue to set records, and long-term holders—the so-called smart money—have started trimming their positions. Understanding whether we are truly approaching the final phase of the Bitcoin bubble is more than academic. It directly affects portfolio positioning, risk tolerance and even tax planning for serious Bitcoin investing.
In prior cycles, Bitcoin delivered parabolic gains before losing 70–80 % of its value. Each time, investors asked the same question: “Is this the top?” By examining the current cryptocurrency market cycle through three lenses—liquidity, demand and momentum—we can see whether history is rhyming or repeating.
Throughout this article we will reference high-profile data: global money supply at record highs, over $62 billion parked in spot ETFs, and corporate treasuries doubling their Bitcoin stacks. We will also point you toward related resources, such as our deep dive into Bitcoin halving cycles and our guide to managing crypto risk in bear markets.
Bottom line: learning why the Bitcoin bubble may be entering its terminal stage gives investors the edge to either capitalize on remaining upside or protect hard-earned gains.
A Crash Course in Bubble Anatomy and Historical Parallels
Economists break bubbles into four classic stages: stealth, awareness, mania and blow-off. The Bitcoin bubble appears to be straddling the boundary between mania and blow-off. In tulip mania (1630s) prices rose 20-fold before crashing overnight; in the dot-com era (1999) penny-stock internet companies tripled on mere press releases. Today small-cap firms like Semler Scientific have jumped 30 % in a single session simply for adding Bitcoin to their treasury. The recipe—easy money, storytelling and leverage—never changes.
Long-term holders historically sell into euphoric rallies, anticipating exhaustion. They did so in 2017 and 2021, both times nailing the Bitcoin price prediction of an 80 % drawdown. Their current distribution hints that the cryptocurrency market cycle is maturing. Yet, unlike past peaks, institutional rails such as spot ETFs have dramatically expanded access, suggesting any collapse could involve larger, more leveraged players.
Key similarities with past bubbles:
• Social contagion: TikTok traders flaunting six-figure gains.
• Media overexposure: nightly news segments tracking the Bitcoin bull run like sports scores.
• Easy leverage: Treasury desks issuing convertible notes to buy coin, mirroring margin use in 1929 equities.
Studying these parallels arms Bitcoin investing enthusiasts with the historical context required to make clear-eyed decisions rather than emotional ones.
Liquidity: The Primary Fuel Feeding the Bitcoin Bubble
No Bitcoin bubble can rage without a firehose of liquidity. Global M2 money supply—aggregating 20 central banks—sits at an all-time high. More than 300 rate cuts have been logged worldwide in just 24 months, outpacing even the 2020 pandemic response. Low financing costs incentivize speculative capital to hunt outsized returns, and Bitcoin remains the juiciest game in town, up over 600 % since late 2022.
Liquidity matters because it determines how long irrational price action can persist. When money is cheap, investors can recycle gains into fresh bets, reinforcing the Bitcoin bull run. Conversely, tightening drains the punch bowl, forcing over-levered players to dump holdings. Analysts watching the Federal Reserve’s dot plot anticipate additional cuts, implying liquidity will likely stay loose through at least mid-2026. That alone suggests the Bitcoin bubble may have one more vertical leg before gravity wins.
Important stats to track:
1. Global Liquidity Index (GLI) – still climbing.
2. Real Fed Funds Rate – negative in inflation-adjusted terms.
3. U.S. reverse-repo balances – trending down, signaling cash redeployment.
After this section we will embed the full YouTube analysis so you can visualize the charts discussed above.
Demand Dynamics: ETFs, Corporations and the Whale Effect
Even with oceans of cash, a Bitcoin bubble needs aggressive buyers. Spot Bitcoin ETFs now hold roughly 4 % of total circulating supply—about $62 billion—after only two years on the market. Daily net inflows frequently outpace newly mined coins by 3:1, creating structural scarcity.
Corporate treasuries add an entirely new layer. From a single adopter in 2020, nearly 50 public companies now carry Bitcoin on their balance sheets. The number holding more than 1,000 coins—whale territory—jumped from 18 to 35 in 12 months. Many financed purchases with low-coupon convertible debt, effectively leveraging shareholder equity. That leverage magnifies both upside and downside; when liquidity tightens, forced selling could accelerate the eventual blow-off.
Retail participation remains robust as well. Coinbase reports record KYC sign-ups, while Google Trends shows “Bitcoin price prediction” queries near 2021 highs. Social sentiment trackers indicate #btctothemoon hashtag usage up 240 % quarter-over-quarter.
Internal link opportunity: see our explainer on crypto ETFs and how they work.
Taken together, deep institutional pockets and vocal retail enthusiasm are classic hallmarks of a late-cycle mania. Until these flows reverse, the Bitcoin bubble can grind higher—even if fundamentals lag traditional valuation models.
Momentum: The Technical Indicator That Ends Bubbles
While liquidity and demand explain why price rises, loss of momentum tells us when the Bitcoin bubble might burst. In 2017 and 2021, the 20-, 50- and 200-day moving averages flattened before turning down, foreshadowing 80 % drawdowns. At present, Bitcoin briefly dipped below these averages in late 2025 but reclaimed them twice—mirroring head-fakes seen in previous bull consolidations.
Key metrics to watch:
• 200-day EMA slope—still marginally positive.
• Relative Strength Index (RSI)—hovering near 55, neutral rather than overbought.
• MACD histogram—converging toward zero, signaling indecision.
If price closes three consecutive weeks under the 200-day line with the EMA curling south, history suggests the blow-off has begun. Until then, momentum remains cautiously constructive, reinforcing the notion that the final phase of the Bitcoin bubble may feature one last rally leg designed to suck in late-arriving capital.
Practical tip: set automated alerts rather than watching charts 24/7. Tools like TradingView or CoinMarketCap let you receive push notifications when moving averages cross. That discipline reduces emotional trading, a cornerstone of sound Bitcoin investing.
Protecting Capital in the Final Phase of the Bitcoin Bubble
Assuming the Bitcoin bubble is indeed in its twilight, what can investors do? First, respect position sizing. Hero trades may work in manias, but disciplined allocation keeps you solvent for the next cycle. Second, consider laddered stop-loss orders under key technical levels; they trigger automatically, shielding you from emotional paralysis if the market gaps lower.
Third, diversify exit strategies. Some sell portions into strength, others rotate gains into less-correlated assets like short-term Treasuries or even gold. Our earlier guide on crypto risk management outlines several hedging tactics, including covered calls and stablecoin parking for yield.
Finally, stay humble. George Soros famously said, “When I see a bubble, I rush in to buy.” The full quote includes the caveat that he exits just as quickly when the trend breaks. The same philosophy applies here: ride the remaining upside of the Bitcoin bull run but prepare mentally and mechanically for the unwind.
Primary takeaway: by monitoring liquidity, demand and momentum, you can make informed decisions rather than reacting to headlines. Whether you believe in a $250k Bitcoin price prediction or a looming 80 % crash, disciplined strategy turns uncertainty into opportunity.
Internal link opportunity: explore our primer on tax-efficient crypto selling before year-end.
