Institutional Optimism Persists, But Bitcoin’s Bull Run Shows Signs of Topping Out

Wall Street's crypto love affair continues—even as technical indicators flash warning signs.

Market Momentum Shifts

Institutional money keeps flowing into digital assets, but the charts tell a different story. Bitcoin's relentless surge appears to be losing steam after hitting multiple all-time highs this cycle. Trading volumes dip while volatility spikes—classic signs of exhaustion.

The Institutional Paradox

Major funds maintain bullish positions despite mounting evidence of overextension. Another case of smart money being early rather than wrong—or just another example of Wall Street chasing yesterday's returns.

Technical Breakdown

Key support levels tested repeatedly. Resistance grows stronger with each rally attempt. The pattern resembles previous market tops, though nobody wants to say it aloud during the champagne celebrations.

Regulatory headwinds strengthen as prices stall. The SEC watches from the sidelines, probably drafting another round of 'we told you so' memos while maintaining their trademark glacial pace on actual clarity.

Whether this proves to be a temporary pause or the cycle's peak remains uncertain—but the smart money's already positioning for both scenarios. After all, in crypto, the only thing more predictable than volatility is Wall Street's ability to monetize it.

Near-Term Gains, But an End in Sight?

The report identifies several tailwinds supporting a Bitcoin upswing. These include robust global liquidity, a strong macroeconomic background, and favorable regulatory dynamics.

However, the authors temper this Optimism by pointing to the need for a cautious market approach. This caution follows the massive $19 billion leverage flush event on October 10.

A key investor focus, the US Federal Reserve’s interest rate policy, is expected to see two further rate cuts this year. Coinbase projects that these two cuts could attract approximately $7 trillion currently held in Money Market Funds (MMFs) back into risk-on assets.

Liquidity Squeeze Ahead

On the liquidity front, the global M2 money supply index, a key measure of worldwide liquidity, showed positive signals at the start of the quarter. However, the situation has since shifted. 

The report warns that a liquidity contraction is expected in early November. This is due to the combined effects of the US government shutdown and the Federal Reserve’s Quantitative Tightening (QT).

Beware the Macroeconomic Headwinds

The report cites a survey of 120 global investors, revealing that 67% of institutional investors and 62% of non-institutional investors are optimistic about Bitcoin’s prospects over the next 3 to 6 months.

However, a clear difference emerges regarding the cycle’s sustainability. Nearly half (45%) of institutional investors believe the market is in the “late-stage bull.” This is signaling an expectation that the growth cycle will soon conclude. In contrast, only 27% of non-institutional investors share this view.

When asked about the primary “Tail Risk” for the crypto market in the near term, both institutional (38%) and non-institutional (29%) respondents cited the macroeconomic environment. This indicates a shared concern among different investor groups.

On the other hand, it is also important to note that this survey was conducted between September 17 and October 3, before the October 10 crash.

Analysts Stand By Lofty Year-End Forecasts

The “Uptober” rally that many investors anticipated appears to be faltering amid the sudden escalation of US-China tensions. Consequently, year-end Bitcoin price forecasts from major financial institutions are under intense scrutiny.

In early October, Citigroup projected a year-end bitcoin price of approximately $133,000, conditional on continued ETF inflows and increased demand from DAT firms. Standard Chartered offered an even higher forecast, predicting Bitcoin could hit $200,000 if weekly ETF inflows maintain the $500 million level.

Similarly, JPMorgan projected a year-end price of $165,000, arguing that bitcoin was undervalued relative to gold. Goldman Sachs also looked to gold for a reference point, suggesting that if gold were to reach $5,000 per ounce, Bitcoin could potentially surge to $220,000.