The recent cryptocurrency market has been sluggish, with overall market morale low. Despite significant progress in the cryptocurrency market over the past two years, including a substantial increase in institutional participation through regulated products, an improving regulatory environment, and a political shift towards supporting digital assets, Bitcoin's recent performance is concerning. After hitting an all-time high of about $126,000 in October, it has significantly retreated and is currently hovering around $86,000. This weakening, occurring in an environment lacking obvious negative catalysts, is much harder to interpret than the sharp crashes seen in previous bear markets— the market seems less sensitive to positive signals, and even those positive signals are extremely short-term and cannot be sustained.

The lack of subsequent buying has caused demand to weaken significantly

Earlier this year, Bitcoin spot ETFs attracted billions of dollars in inflows, with companies like MicroStrategy (now known as Strategy) continually increasing their holdings, which should have provided strong support for prices. However, the reality is the opposite: trading volumes are sluggish, ETF fund flows have turned to net outflows, and there is limited willingness to rebuild leverage in the derivatives market. Even though the company led by Michael Saylor continues to buy, it has failed to reverse the downward trend, highlighting that new demand at current price levels is extremely scarce. Despite the industry achieving many regulatory and institutional goals, many investors initially expected strong support, but the subsequent absence of buying has surprised the market. Currently, the decline is more due to a drop in participation rather than panic selling. Unlike in the past, this time is not dominated by forced liquidations (although about $19 billion in exposure was cleared in early October), with low financing rates and cautious options positioning leading to a slow price decline, creating a 'demand vacuum.'

Decoupling from traditional assets has intensified market unease

Bitcoin typically moves in sync with high-growth tech stocks, but currently, the U.S. stock market is strong (the S&P 500 hitting new highs), yet Bitcoin has failed to keep up. This divergence indicates that crypto-specific factors are driving prices, and overall risk appetite alone is insufficient to propel an upward movement.

For the market, this raises the question: what role does Bitcoin play in a diversified portfolio during periods of economic stability?

Long-term holders (whales) are exacerbating selling pressure, as many holders who bought in at low prices are cashing out at high levels, significantly impacting the market when new buyers are scarce. This supply-demand imbalance makes Bitcoin vulnerable during periods of pressure; institutional inflows were strong at first, but once allocations are complete, continued demand tends to stabilize.

Currently, Bitcoin needs to attract a new buyer demographic or find balance through price adjustments—but from the current perspective, the market is not 'collapsing,' but rather undergoing a natural reset.

Bitcoin critic Peter Schiff recently reiterated his warning that as gold prices break $4,300 and silver breaks $60 to set new records, investors are shifting from risk assets to traditional safe-haven assets. He believes the narrative of Bitcoin as a 'hedge against dollar weakness' is losing its persuasive power; in times of uncertainty, precious metals are more trusted. I personally do not like this person, but based on the gains of gold and silver, it seems there is some truth to it.

Regardless, if market panic intensifies, Bitcoin may face more severe sell-offs. This round of bull market is closely linked to macro factors; currently, the Brazilian economy is facing risks of inflation, unemployment, and declining institutional trust, making it difficult for Bitcoin to benefit in this environment. 10x Research mentions that year-end hedge fund redemptions ($10-20 billion) are likely to exacerbate the situation.

The Bitcoin community strikes back: history proves its resilience

Despite frequent warnings, Bitcoin supporters remain optimistic. Long-term holders emphasize that Bitcoin has repeatedly endured declines of over 80% but continues to reach new highs; Schiff has been predicting a collapse since the $100 Bitcoin era but has repeatedly been proven wrong.

The editor believes that the potential downside risks are not driven by emotionally charged predictions, but are the inevitable result of supply-demand imbalances. Historically, markets resolve these imbalances through price rather than patience. This is why levels once considered unattainable can re-enter the discussion—not as targets, but as areas where capital may once again be willing to re-enter. Perhaps Bitcoin could perform well in a deep confidence crisis, providing liquidity and exit mechanisms rather than relying solely on short-term volatility.

On-chain indicators show that pressure has not subsided, with short-term holders facing deep losses

On-chain data continues to release cautious signals. Bitcoin's spot price is significantly below the short-term holders' realized cost (around $101,800), indicating that recent investors are generally in a state of unrealized losses. Meanwhile, prices are also slightly below the average cost of active investors (around $87,900). Historical experience shows that when prices hover in this area, market sentiment can quickly shift. If selling pressure amplifies again, the next key structural support level will fall around the real market average near $81,300. This level often plays an important role during bear market phases.

Short-term outlook: Stable but fragile, waiting for clear catalysts

Overall, the cryptocurrency market is in a state of 'watchful balance'—seemingly stable, yet fundamentally fragile. The lack of sufficient liquidity and new buying support makes prices highly sensitive to any minor disturbances. Until a significant turning point in macro liquidity occurs (such as clearer easing signals from the Fed) or positioning structures are completely reset, Bitcoin and mainstream assets are likely to continue oscillating within the current narrow range.

In the short term, the $86,000-$88,000 range will become the focal point of the bulls and bears. A breakout requires a significant increase in trading volume, while a breakdown could quickly test the $84,000 support or even lower.

The editor believes the current pullback is a cyclical adjustment rather than a structural collapse. In the long term, institutional adoption and scarcity continue to support upward potential, but caution is warranted in the short term regarding macro risks and capital rotation. Everyone is paying attention to daily ETF flows, the Fed's subsequent statements, and technical breakout signals, diversifying their allocations and implementing strict stop-losses.