Bitcoin in the Oscillation Cycle: Changing Situation, Not Collapse

The Bitcoin market is currently in a transition phase. Indicators that once supported an “automatic” upward momentum are now showing signs of change. This does not mean the wave of price increases is about to end, but rather that Bitcoin’s oscillation cycle is entering a new stage—from “easy” to “more difficult.”

ETF Capital Flows: From Continuous Buying to Breakouts

Since US-based spot Bitcoin ETF funds were permitted to trade in early 2024, tens of billions of dollars have flooded into the market. Financial institutions, hedge funds, and retail investors through brokerage platforms have created a steady flow supporting prices.

However, in November, this picture began to shift. Some trading sessions recorded the largest withdrawals since the ETF launch. Even funds that were previously loyal buyers (like BlackRock) have turned to net sellers on certain days.

Looking at accumulated data from Farside, the flow remains positive, but the marginal flow direction has changed. This means Bitcoin’s price is no longer supported by a continuous “mechanical” buyer. Instead of new money flowing in, some investors are taking profits or reducing risk.

Part of the reason is that regulators have increased position limits for ETF options (from 25,000 to 250,000 contracts), allowing institutions to use covered-call strategies to manage risk without liquidating entire positions. As a result, the “buy and hold at all costs” energy has diminished.

Stablecoins: When Crypto Cash Supply Stops Growing

If ETFs are the gateway for Wall Street, then stablecoins (USDT, USDC) are the core cash within the crypto system. Throughout most of the past year, each increase in stablecoin supply was often accompanied by a jump in Bitcoin’s price.

But in recent weeks, the total stablecoin supply has stabilized, even slightly decreased. This reflects two trends: one, traders withdrawing funds from exchanges to seek higher-yield lending channels (like Treasury bonds), and another, a genuine capital outflow from the market.

The clear implication: the amount of digital money capable of pushing BTC higher is no longer expanding. Each subsequent price rally will depend on a nearly fixed “pot” of funds, with no new capital “pouring in.” Volatility will become more characterized by “static movement” rather than “powerful explosions.”

Derivatives Market: When Leverage Cools Down

Two key indicators in the derivatives market are both declining:

Funding Rate: On perpetual futures contracts, this fee has shifted from strongly positive to frequently negative on offshore exchanges. This indicates traders are less long with leverage—some are even short to hedge against downside risk.

CME Basis: The spread between CME futures prices and spot prices has narrowed, signaling that demand for leveraged longs is no longer strong.

Open Interest: The open interest in futures contracts is lower than at its peak, indicating many long positions have been liquidated during the recent decline.

Why does this matter? Because leveraged long traders are often the marginal force that turns a “healthy” uptrend into a “standing wave.” When they retreat, volatility slows, becomes less predictable, and is less attractive to those seeking immediate new highs. Moreover, a market with less leverage is less prone to sudden liquidations, creating “liquidity gaps.”

Who Is Buying When Everything Else Is Cooling?

This is where the picture becomes more complex. On-chain data shows some long-term holders have taken profits during recent volatility—“old wallets in hibernation” are starting to move again. At the same time, there are fewer signs of new wallets and retail buyers accumulating quietly.

This aligns with NYDIG’s view: Bitcoin’s oscillation cycle is in a “reset” phase. The most obvious demand drivers (ETF, stablecoins, leverage) have weakened, but the slow transfer from wealthy holders to new groups is ongoing. This capital flow is less mechanical, less predictable, making the market more brutal for latecomers.

Practical Implications for Investors

The “easy” mode is over: For most of the year, money from ETFs and stablecoins flowed in like a one-way escalator. Now, that is no longer the case. The underlying capital flow is fading, leading to heavier declines and more difficult rallies.

The cycle is not over: The slowdown in demand drivers does not automatically kill the uptrend. Bitcoin’s long-term case—fixed supply, developing institutional channels—remains intact. The path from here to the next peak will be different: instead of a straight line driven by a major story, the market will trade based on positions and available liquidity.

Patience over recklessness: ETF capital flows may fluctuate, stablecoins may remain quiet, and the derivatives market may stay neutral for an extended period. Such an environment demands patience rather than impulsiveness.

In summary, Bitcoin in its current oscillation cycle is not collapsing—it’s “breathing.” The demand drivers that fueled the early stages of the bull market are slowing down, but this is not a sign of ending—it’s a transition. The next phase will depend less on automatic capital flows and more on investor decisions: do they still want to hold this asset now that the “easy” part is over?