This Is the FINAL Phase of the Bitcoin Bubble

This chart reveals how the strongest hands in Bitcoin, also known as long-term holders, are positioning in the market. When this line moves up, it signals they are accumulating Bitcoin, and when it goes down, it means they are selling. Since July of 2025, this line has been moving lower, indicating that even the most patient holders have started to sell their holdings. If we put Bitcoin's price on top, we see that these long-term holders have built a strong track record of positioning ahead of major market moves. Heading into both the 2017 and 2021 bull market tops, they were heavily selling right before Bitcoin's bubble bursted and price crashed by 80%. And as Bitcoin was bottoming in 2018 and 2022, these investors were buying aggressively. While not perfect, this consistency is why long-term holders are often referred to as smart money. So when they start reducing exposure at this pace, it often suggests that these investors are preparing for significant downside on Bitcoin. After all, Bitcoin has been the best-performing asset since this bull market began in late 2022. It's up over 600%. For comparison, silver has risen by 110%, the Nasdaq by around 115%, and gold about 130%. These types of returns by Bitcoin also ignited a wave of speculative buying in public corporations. Companies that converted into Bitcoin treasury vehicles saw their stock prices soar simply by adding Bitcoin to their balance sheet. For example, Semmler Scientific and Sequon's communications both jumped over 30% in a single day after announcing a Bitcoin treasury strategy. This pattern looked very similar to past bubbles, like the dot-com bubble, when small companies would soar the moment they announced a new internet venture. A typical bubble works in four distinct phases. It begins with the initial phase, also known as stealth phase, where early investors recognize the opportunity and start buying quietly. Then comes the awareness phase, as institutional capital begins to enter and prices start rising more steadily. Next is the mania phase, marked by extreme enthusiasm, heavy media coverage, and explosive returns. This is where the bubble truly forms. And finally, the blow-off phase, when investors are fully convinced that prices can only go higher, but the asset instead puts in a major top and crashes, creating a lot of financial pain in the process. Going back to the 1600s, most bubbles tend to last anywhere from one to five years. The earliest recorded bubble was the tulip mania of the 1600s, when tulip bulbs in the Netherlands became so valuable that some sold for more than an entire house, right before tulip prices collapsed almost overnight. That bubble revealed how social contagion, leverage, and new financial instruments can fuel speculative manias. And we've recently seen similar forces at play with Bitcoin through the rise of exchange-traded funds, leveraged funds, and treasury companies. In fact, academic research has found that one of Bitcoin's characteristics is to display bubble-like behavior in each bull cycle, with the 2017 bull run being a prime example that showed the four stages of a typical bubble. Today, on one hand, Bitcoin is seeing widespread enthusiasm, heavy media attention, and the kind of public optimism typical of a mania phase. On the other, long-term holders have been selling, and price action has been choppy, suggesting the early stages of what could become the blow-off phase. To evaluate which stage Bitcoin is in and whether the bubble has already bursted, we need to look at the three key forces that drive price during the mania phase. The first factor is liquidity. This is the amount of money circulating in the financial system that can flow into different assets. Academic research has consistently shown that monetary expansion and excess liquidity tend to align with Bitcoin's expansion or mania phase. This chart tracks global money supply by combining liquidity from 20 major central banks. Overall, global liquidity has been trending higher since 2016. But within that, there have been two major contraction periods, one in 2018 and again in 2022. If we put Bitcoin's price on top, we see that it has also trended higher over the same period, but with major drawdowns during those liquidity contractions. Today, global liquidity is sitting near record highs and is likely to rise further. That's because the amount of liquidity in the system is ultimately dictated by what central banks are doing. When they raise interest rates, borrowing becomes more expensive, which drains liquidity. But when they cut rates, it injects new liquidity, creating the fuel that drives risk assets like Bitcoin. Recently, global central banks have been cutting rates aggressively. In just the past two years, there have been more than 300 rate cuts worldwide. This pace is even faster than what we saw in 2020 after the pandemic and comparable to the easing cycle that followed the 2008 financial crisis. And today, major central banks like the Federal Reserve have been announcing more rate cuts to come in the months ahead. So, liquidity right now is abundant and doesn't seem to be showing signs of tightening just yet. The second key factor is demand. Because even with high liquidity, no bubble can sustain itself without continuous inflows from buyers. High demand keeps the price elevated even as early participants begin taking profits. Right now, ETF inflows are still very strong. These funds collectively hold a record worth of Bitcoin. At the same time, the number of treasury companies buying Bitcoin has gone parabolic. Back in 2020, there was only one such company. But now, that number has surged to almost 50 and is still continuing to grow. That's the kind of acceleration that typically occurs during the mania phase, not the crash phase. In fact, demand from public companies isn't just growing in number, but also in scale. This chart shows the number of treasury companies holding more than 1,000 Bitcoin, worth over $110 million at today's price. These are corporations that are also known as whales because of their massive size. That count has risen from 18 in the third quarter of 2024 to 35 in the third quarter of 2025, so nearly doubling in just one year. So, demand right now is not only broad, but also deep, driven by large, well-capitalized buyers continuing to accumulate Bitcoin. The final key factor is price momentum. And this is by far the most important one. If we look back at Bitcoin's 2017 bull run, the phases of the bubble we discussed earlier is very clear. Now, if we add some key moving averages to show us what momentum looked like, we see that the momentum of the bull market was extremely strong, especially during the mania phase of the bubble. All the key moving averages were pointing higher, and price stayed above them. When the peak was made, however, we see that momentum began to turn around. The moving averages curled downwards, and price struggled to stay above them. That shift marked the start of the painful blow-off phase. The reason this is so important is that every bubble is ultimately powered by the momentum of returns. During bubbles, most investors know that the behavior is irrational, but as long as the gains keep compounding faster than anywhere else, they keep participating. But when that momentum slows, it's precisely the moment where the market becomes vulnerable to reversing. Today, Bitcoin's price has broken below the key moving averages, suggesting that momentum might be weakening. But we also saw something similar in late 2023, mid-2024, and early 2025, where price briefly dipped below the moving averages, only to reclaim it and move higher. If Bitcoin is able to do something similar, we'll once again have a green light from momentum. But a rejection instead, with the moving averages sloping down, would make us readjust our stance quickly. For now, we have a setup where liquidity is abundant, demand remains strong, and price momentum has still not confirmed a breakdown. Together, these are the conditions that typically define the latter stages of the mania phase, not the beginning stages of the painful blow-off phase. In fact, we can see that long-term holders tend to usually sell into the mania phase, taking advantage of high liquidity and enthusiasm, rather than waiting for the bubble to burst. And that appears to be what's happening today as well. At some point, however, macro conditions will shift, and euphoria will reach extreme levels, eventually leading to this bubble finally bursting. And when it does, we think the fallout could be more severe than what we saw in Bitcoin's past cycles. After all, a large part of the current demand has been driven by treasury companies, taking on increasing amounts of debt. Back in 2023, these companies collectively held around $2 billion in liabilities. Today, that number has surged to nearly $12 billion, with no signs of slowing down. And even Bitcoin miners have followed a similar path. Their total debt has skyrocketed from $2 billion in 2023 to more than $22 billion today. This growing leverage means that when liquidity eventually tightens, many of these highly indebted players could be forced to sell their holdings to meet their debt obligations, amplifying downside pressure and making the next correction more painful. But for now, we still believe this Bitcoin bubble has more room to grow, as far as price is able to reclaim the key moving averages. Which is why we remain constructive on the asset. As George Soros once said, when I see a bubble forming, I rush in to buy, adding fuel to the fire. We've studied the greatest macro traders of all times at Bravo's research, and we've adopted the same principles that they use to build incredible wealth in the market. These rules are what allow us to be exposed to the right parts of the market at the right time, and also make sure that we have very limited losses when we are wrong about a trade. Our approach has delivered some exceptional returns in the past year, like 30% on Bitcoin, 63% on Solana, and even 83% on Ethereum. And more importantly, we've kept most of our losses contained to around 5%. If you want to follow our strategy step by step with real-time buy alerts, sell signals, and portfolio updates, then make sure to join us using the link below.