Bitcoin Doesn't Crash, The Market Is Just "Taking a Deep Breath"

Currently, Bitcoin is trading around $91.77K with a volatility of +1.15% in 24 hours. A question is looming over the entire market: have the “big buyers” truly given up on this bullish path, or are they just starting to change their strategy?

The reality is more complex than any headline can describe. The main drivers pushing prices higher over the past year are showing clear signs of slowing down, but this is not a sign of collapse. That’s the hardest part to explain to outsiders.

When “Easy” Channels Start Reversing

In January 2024, when Bitcoin spot ETFs launched in the US, capital flowed in at an unprecedented pace. Tens of billions of dollars from hedge funds, family offices, and financial advisors found an “official” channel to access Bitcoin.

The most noticeable thing is: over 10 months, these ETFs almost continuously bought more than they sold each week. Then came November.

Suddenly, days with large withdrawals began to appear. Some days recorded the largest capital outflows since launch. Even large funds like BlackRock—once hesitant buyers—shifted to a selling mode.

Looking at the daily data, it might seem like just clever profit-taking. But when expanding the perspective, the real picture is less dramatic. The accumulated capital flow remains significantly positive. Funds still hold enormous amounts of Bitcoin. The only change is the direction of the marginal capital flow—new money is no longer flowing in as continuously as before.

Part of the reason comes from options. When regulators raised position limits from 25,000 to 250,000 contracts, institutional investors gained additional tools to manage risk without selling everything off. They can deploy strategies like covered calls to generate income or use derivatives overlays for hedging.

The result? The “buy and hold at all costs” mentality has been democratized into “strategic position adjustments.”

Stablecoins: When Digital Cash Stops “Pumping Up”

If ETFs are the official gateway for Wall Street, then stablecoins are the core crypto money supply within the system. When USDT, USDC, and other stablecoins grow, it usually indicates more capital being sent to exchanges, ready for deployment.

Throughout the year, every Bitcoin surge coincided with stablecoin base growth. That’s a clear correlation too obvious to ignore. But in the past month, that pattern has been shaken.

The total stablecoin supply has stopped increasing and even slightly declined. Although different tracking tools may disagree on exact figures, the trend is clear: digital cash is no longer “pumping” as it used to.

Partly, this is due to withdrawals to reduce risk. Traders are shifting capital into treasury bonds. Smaller tokens are losing market share. But most of all, it’s a hard truth: capital is actually leaving the system.

In other words, the digital dollar liquidity that once “pumped” Bitcoin higher is no longer expanding. Each rally now must be funded from an almost fixed “pot” of money. There is less “new money” ready to flood into BTC as market sentiment shifts.

Derivative Traders: From “Attack” to “Defense”

Funding rate—the fee traders pay to hold futures contracts close to the spot price—is a crucial indicator. When it’s strongly positive, it means many are long with high leverage. When negative, it indicates shorts are gaining dominance.

Similarly, the “basis” on CME futures (—the gap between futures prices and spot prices)—reflects bullish expectations. A large positive basis usually signals strong leveraged long demand.

And here’s the key point: both indicators have cooled significantly.

Funding on offshore perpetual contracts has turned negative in some sessions. CME basis has narrowed. Open interest is lower than at the peak. This isn’t necessarily bad news; it’s just a realistic sign.

Many leveraged long positions were liquidated during the recent decline and haven’t rushed back in. Traders are more cautious. In some places, they are willing to pay fees for downside hedging rather than continue reckless longs.

Why is this important? Because leveraged buyers are often the “marginal” force that turns a healthy uptrend into a rush. When they get liquidated or give up their positions, movements slow down, become less predictable, and less attractive to those expecting new highs immediately.

Moreover, when leverage accumulates in one direction, it amplifies both gains and losses. A less-leveraged market can still be volatile, but the risk of falling into a “liquidity gap” due to sudden liquidations diminishes.

Who Is Buying When Others Are Selling?

This is the million-dollar question. And the answer is more complex than a headline can contain.

On-chain data shows some long-term holders have taken advantage of volatility to take profits. Coins that have been dormant for years are starting to move again. That’s a classic sign of profit-taking.

But at the same time, there are signs of new wallets and small buyers quietly accumulating. Some rarely-spent addresses are increasing their holdings. Small inflows on major exchanges remain skewed toward buying even during tough days.

That’s the real picture: a slow transition from long-term, wealthy holders to newer, smaller participants.

This capital is more volatile and less “mechanical” than during the ETF boom. It makes the market more harsh for latecomers. But it doesn’t mean capital has disappeared entirely.

What’s Next?

To understand better, consider these three points:

First, the “easy mode” is almost over. For most of the year, ETF flows and stablecoin bases grew like a one-way escalator. You didn’t need to understand funding rates or options limits to see why prices kept rising: new money kept pouring in. That underlying demand momentum has waned, even turning into net selling in some weeks. The result: heavier declines and harder-to-sustain rallies.

Second, the slowdown in demand drivers doesn’t automatically kill the cycle. Bitcoin’s long-term fundamentals still revolve around: fixed supply, expanding institutional channels, and steady development of Bitcoin’s presence on balance sheets. Those foundations remain intact.

Third, the path to the next peak will be different. Instead of a straight line driven by a big story, the market will trade more based on positions and liquidity “pools.” ETF flows may fluctuate between red and green. Stablecoins may hover around a plateau rather than spike. Derivatives markets might spend more time in neutral states. Such an environment demands more patience than recklessness.

Looking broadly, the slowdown in demand drivers is a natural part of each cycle’s “breathing.” Large inflows set the stage for excess. Then outflows, leverage cooling, and market rebalancing follow. New buyers appear at lower prices—often quietly, with less noise.

Bitcoin is somewhere in that rebalancing phase. Data supports this view. The forces that drove the early bull phase are slowing down, even reversing in some cases. But that doesn’t mean the “machine” is broken. It means the next stage will depend less on automatic capital flows and more on whether investors truly want to hold this asset once the easy gains are gone.