1. Bitcoin is Weak, Not Strong
In the past week, a significant divergence trend has been forming: while the S&P 500 index continues to hover near historical highs supported by strong corporate earnings and relatively stable macroeconomic expectations, Bitcoin's price has been trapped in a narrow range between $84,000 and $91,000. This divergence is not a signal of Bitcoin leading the market, but rather clear evidence of its relative weakness deepening.
According to the latest Alpha report analysis from Bitfinex, the core of this decoupling phenomenon lies in the fundamental differences between the two. The traditional stock market benefits from corporate earnings resilience and a controllable economic slowdown narrative, while Bitcoin is currently constrained by its internal structural issues.
"The behavior patterns of traders have changed," the report points out, "selling the rally has become the dominant short-term strategy, in stark contrast to the prevailing 'buying the dip' mentality from 2023 to early 2024."
This judgment is strongly supported by on-chain data. The data shows that currently, over 7 million Bitcoin holding addresses are in an unrealized loss state. This scale is highly similar to the turbulent consolidation period in the first half of 2022 (before the LUNA collapse), indicating that a large number of investors who entered at higher price levels are under pressure, and any price rebound could trigger their sell-off to mitigate losses or exit to observe.
2. Demand-Side Exhaustion and Structural Pressure
The current weakness is bidirectional, driven by the direct shrinkage of spot demand and deeper structural factors.
Spot demand is clearly exhausted:
ETF fund flows have reversed: As the most important incremental funding channel this year, the U.S. spot Bitcoin ETF has seen a continuous net outflow of funds. This indicates that some early profit-taking institutional funds are withdrawing or shifting to other better-performing risk assets.
Buying momentum has deteriorated: According to order book data from major exchanges, "taker buy volume" has significantly worsened. The cumulative volume delta (CVD) has turned negative, technically confirming that selling pressure continues to exceed buying pressure.
Trading sentiment has shifted: Changes in net positions on exchanges show that funds are flowing out of exchanges, but this is not entirely a positive "hoarding" signal. Combined with the futures funding rate remaining at a neutral to low level, it indicates that the outflowing funds are more for hedging and exiting purposes rather than being transferred to private wallets for long-term storage.
Structural pressure continues to exist:
Macroeconomic headwinds persist: Although the Federal Reserve ended quantitative tightening in early December, the latest U.S. economic data shows a complex "cooling without deflation" pattern. September's real consumer spending stagnated, raising doubts in the market about the path and pace of future rate cuts. The high-interest-rate environment continues to suppress the valuation models of all risk assets, and Bitcoin cannot remain unaffected.
Typical characteristics of "mid-cycle weakness": From a market cycle perspective, Bitcoin is currently positioned at the ambiguous boundary between "mid-cycle weakness" and "full-blown bear market deterioration." The market struggles to effectively break through and stabilize above its real realized price (approximately $85,000) average, indicating insufficient endogenous momentum.
3. Divergence Between Institutional Long-Term Layout and Short-Term Trading Behavior
On one hand, short-term traders are selling on rallies, and market sentiment is cautious. On the other hand, the institutions and regulatory narratives that lay the long-term foundation for the market are continuing to advance, even accelerating:
Traditional financial giants' attitude shift: In early December, Vanguard published an announcement titled "Cryptocurrency and Vanguard: What Investors Need to Know" on its official website, officially announcing that it would allow clients to trade certain third-party cryptocurrency ETFs and mutual funds through their brokerage accounts, leading to a significant market rebound. This is a milestone shift, marking the acceptance of cryptocurrency as an asset class by the most conservative financial bastions.
Global regulatory framework rapidly taking shape: The UK has officially passed the "2025 Property (Digital Assets, etc.) Bill," legally defining cryptocurrency as independent personal property. The U.S. Commodity Futures Trading Commission (CFTC) has also approved the first spot cryptocurrency product listed on a federally regulated exchange. These measures are paving the way for larger-scale and safer institutional fund entry in the future.
The Bitfinex report commented: "The short-term price discovery mechanism of the market and the long-term value discovery mechanism are being driven by different participants. The current price weakness may be accumulating energy for the next cycle driven by clearer regulation and broader adoption."
4. No Catalysts Found to Break the Stalemate
Currently, the Bitcoin market is in a "high-pressure balance" state. Over 7 million BTC in unrealized losses constitute the "sword of Damocles" above, while moderate continuous fund inflows and the steadfast holdings of long-term holders form a fragile cushion below.
Breaking the current stalemate requires new, stronger catalysts, which may come from one or more of the following aspects:
- Clarification of macro policies: The market needs to see the Federal Reserve not only stop tightening but also turn towards clear signals of easing. The forward guidance from the next interest rate meeting (this Thursday) is crucial.
Reversal of fund flows in Bitcoin spot ETFs: The current trend of fund outflows needs to be reversed, with a return to sustained net inflows to prove that institutional allocation demand remains solid.
Key technical breakthroughs: Prices need to effectively break through and stabilize above the resistance range of $91,000 to alleviate the anxiety of a large number of underwater holders and attract trend traders back.
The decoupling of Bitcoin from traditional risk assets is a true reflection of its complex predicament both internally and externally. It is undergoing a "stress test" influenced by macroeconomic headwinds, internal profit-taking pressures, and long-term structural construction. The next direction of the market will depend on the resonance of macro narratives, regulatory progress, and the defense of key technical levels.
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