‘Q2 Will Be Full of Blood’: Analyst Flips Fully Bearish on Bitcoin

A popular analyst has warned of a brutal Q2 for Bitcoin, amidst weakening market participation.

Over the last few months, conflict in the Middle East has put pressure on crypto markets. Bitcoin faced a fresh decline of nearly 3% on Friday as the price dropped toward $66,000 from $69,200 yesterday.

Now, pseudonymous analyst Mr. Wall Street warned that the second quarter could be “full of blood” as downside risks build across both market structure and macro conditions.

Short-Term Hope Fades

In a recent post on X, the analyst said his earlier thesis of short-term bullishness and mid-term bearishness has now fully transformed to a bearish stance across both timeframes. He pointed to the recent 27% rally from $60,000 to $76,000 as a move driven by market makers to create liquidity for a larger downside move.

According to him, even if Bitcoin briefly pushes higher to sweep upside liquidity, such a move would only be temporary before a broader decline. Upon noticing the change, he stated that he closed his short-term long positions at $68,000 and opened shorts, while also placing additional short orders between $77,000 and $83,000 in anticipation of potential liquidity grabs.

He added that a large amount of liquidity has built up below the current price in recent weeks, along with levels from the 2024 summer range, which supports the thesis of a potential Bitcoin drop to $40,000-$45,000. Beyond technical factors, ongoing geopolitical risks have a crucial role to play. A possible escalation involving the United States and Iran could trigger a global recession driven largely by a sharp rise in oil prices, which is expected to weigh heavily on risk assets like Bitcoin.

Volatility Ahead

Echoing similar concerns around weakening fundamentals, João Wedson, founder of Alphractal, flagged reduced network activity. In his latest analysis, Wedson found that Bitcoin’s daily transaction fees, measured in US dollars, have dropped to levels last seen during previous market bottoms and now rank among the lowest observed in the past several years.

Such low fee generation indicates weak network demand, a condition that has historically led to periods of intense volatility.

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In a separate post, Wedson warned traders against chasing upward price movements during a bearish market, while arguing that such behavior often benefits larger players rather than retail investors. The analyst stated that repeatedly buying into green candles in a downtrend is not a sound investment strategy, but instead provides exit liquidity for whales looking to offload positions.