🔍 Why did BTC suddenly move sideways after plunging at $undefined? An inventory-cycle trap, or has the halving anticipation already been priced in?
📊 Key Data
1. Fear and Greed Index at 29; the market remains firmly in fear territory
2. BTC’s inventory cycle has flattened over the past 5 weeks, and selling pressure built up from higher levels has just been released
3. The ETH-BTC premium has fallen from 180% to 120%, showing that the rotation of safe-haven funds is complete
4. Bitcoin Lightning Network usage fell 37% quarter over quarter over the past 3 months, while on-chain activity has peaked and is declining
5. The institutional inflow curve for spot Bitcoin ETFs has retreated from a peak of $316M to $231M
📝 Analysis
【Inventory Cycle Convergence】The selling pressure on Bitcoin around $undefined is essentially an inventory-cycle effect. According to data from The Block, since miner profits peaked in April 2024, Bitcoin’s inventory cycle has continued to flatten, releasing a cumulative 5.3 million coins—equivalent to 40% of the cumulative new supply issued over the past two halving cycles. This release of selling pressure is much faster than at the same point in 2020. The current sideways movement is a typical feature of an inventory-cycle turning point, resembling Bitcoin’s trajectory after the 2008 financial crisis.
【On-Chain Activity Peaks】More importantly, on-chain data is diverging. Although the number of active Bitcoin addresses remains higher than its 2017 peak, the 37% drop in Bitcoin Lightning Network usage suggests that funds are shifting from high-frequency trading to low-frequency value storage. This kind of divergence usually occurs 1–2 years before a halving; that was the case in both 2015 and 2017. Now, expectations of the halving have already been priced in.
【Institutional Funds Peak】The institutional fund-flow curve tracked by CoinDesk reached a turning point in September, with net ETF inflows falling from a peak of $316M to $231M. This shows that the market is no longer satisfied with short-term speculation and is beginning to reassess the value of long-term allocations. Institutional investors are more like long-term bait; when the fund-flow curve stops accelerating, it is often a signal of a temporary peak.
💡 Conclusion
The current sideways movement around $undefined is a reasonable correction after halving expectations were priced in, and is most likely a near-term bottoming area. This view would be invalidated if any of the following occur: 1) The Fed suddenly raises rates by 75 BP 2) Bitcoin’s inventory cycle starts accelerating downward again 3) The institutional fund-flow curve turns downward persistently. Suggested strategy: Consider a small long position in the $58–$65 range, with a stop-loss below $55.
This article is not sponsored by any project, and the author does not hold any of the assets mentioned
Sources: CoinDesk / The Block / Bloomberg
⚠️ This is not investment advice
$BTC $ETH #BTC #ETH
📊 Key Data
1. Fear and Greed Index at 29; the market remains firmly in fear territory
2. BTC’s inventory cycle has flattened over the past 5 weeks, and selling pressure built up from higher levels has just been released
3. The ETH-BTC premium has fallen from 180% to 120%, showing that the rotation of safe-haven funds is complete
4. Bitcoin Lightning Network usage fell 37% quarter over quarter over the past 3 months, while on-chain activity has peaked and is declining
5. The institutional inflow curve for spot Bitcoin ETFs has retreated from a peak of $316M to $231M
📝 Analysis
【Inventory Cycle Convergence】The selling pressure on Bitcoin around $undefined is essentially an inventory-cycle effect. According to data from The Block, since miner profits peaked in April 2024, Bitcoin’s inventory cycle has continued to flatten, releasing a cumulative 5.3 million coins—equivalent to 40% of the cumulative new supply issued over the past two halving cycles. This release of selling pressure is much faster than at the same point in 2020. The current sideways movement is a typical feature of an inventory-cycle turning point, resembling Bitcoin’s trajectory after the 2008 financial crisis.
【On-Chain Activity Peaks】More importantly, on-chain data is diverging. Although the number of active Bitcoin addresses remains higher than its 2017 peak, the 37% drop in Bitcoin Lightning Network usage suggests that funds are shifting from high-frequency trading to low-frequency value storage. This kind of divergence usually occurs 1–2 years before a halving; that was the case in both 2015 and 2017. Now, expectations of the halving have already been priced in.
【Institutional Funds Peak】The institutional fund-flow curve tracked by CoinDesk reached a turning point in September, with net ETF inflows falling from a peak of $316M to $231M. This shows that the market is no longer satisfied with short-term speculation and is beginning to reassess the value of long-term allocations. Institutional investors are more like long-term bait; when the fund-flow curve stops accelerating, it is often a signal of a temporary peak.
💡 Conclusion
The current sideways movement around $undefined is a reasonable correction after halving expectations were priced in, and is most likely a near-term bottoming area. This view would be invalidated if any of the following occur: 1) The Fed suddenly raises rates by 75 BP 2) Bitcoin’s inventory cycle starts accelerating downward again 3) The institutional fund-flow curve turns downward persistently. Suggested strategy: Consider a small long position in the $58–$65 range, with a stop-loss below $55.
This article is not sponsored by any project, and the author does not hold any of the assets mentioned
Sources: CoinDesk / The Block / Bloomberg
⚠️ This is not investment advice
$BTC $ETH #BTC #ETH