Bitcoin Faces Market Changes: Is a Stabilization Near?
The cryptocurrency market is experiencing a recalibration fueled by decreased ETF demand and adjustments in leverage, with implications for Bitcoin's trajectory.
Bitcoin Faces Market Changes: Is a Stabilization Near?
The cryptocurrency market is undergoing a broad recalibration, influenced by declining demand from ETFs and DATs, a resetting of leverage in futures and DeFi, and ongoing low spot liquidity.
These circumstances have put pressure on prices, yet they also contribute to a healthier system, reducing leverage and aligning more closely with fundamentals.
ETF Demand Wanes Amid Low Liquidity
Recent data from CoinMetrics indicates a significant weakening in absorption channels. Bitcoin ETFs have faced net outflows totaling $4.9 billion since mid-October, marking the largest redemption cycle since April 2025. Additionally, DATs are under cost-basis pressure, which impacts their premiums and restricts their capital-raising potential.
Michael Saylor’s MicroStrategy, which holds a substantial 649,870 BTC at an average cost of $74,333, has slowed its accumulation as its equity valuation has softened, paralleling a broader cooling in the treasury markets. Meanwhile, leverage has also reset in futures and DeFi markets following the liquidation cascade on October 10, which wiped out over 30% of perpetual futures open interest in mere hours, bringing OI below pre-crash levels.
Funding rates are edging towards neutral or slightly negative, and in the DeFi realm, active loans on Aave V3 have diminished since late September, especially following the troubles with Ethena’s USDe depegging that led to a 65% drop in USDe loans.
Caution in the Market
BTC, ETH, and SOL are currently trading with top-of-book depth still 30-40% below early October levels, reflecting the market’s ongoing fragility and susceptibility to significant price fluctuations.
CoinMetrics observes that this internal reset is unfolding against a challenging macroeconomic backdrop, with uncertainties around interest rate cuts, weakness in tech stocks, and an overall risk-off sentiment dampening the appetite for digital assets.
Looking Ahead
Bitcoin’s recent divergence from gold, which has surged over 50% this year, alongside the waning momentum in AI stocks, illustrates how changing macroeconomic conditions have impacted market sentiment. Despite the pressure on prices, they also position the market in a more neutral and less leveraged state as it undergoes a cleansing of positioning and mitigates systemic vulnerabilities.
A steady recovery in key demand channels like ETF inflows, renewed DAT accumulation, and expansion of stablecoin supply, along with improved spot liquidity, could establish a foundation for stabilization and potential recovery. Until these factors materialize, the market will remain caught between an uncooperative macro environment and a crypto landscape that has become internally healthier yet awaits a stronger resurgence in demand.
