Recently, Bitcoin has experienced continuous and intense fluctuations within a high range, with multiple instances of a "roller coaster" market, rapidly dropping and then quickly rebounding. Changes in the capital flow of the U.S. spot Bitcoin ETF, fluctuations in Federal Reserve policy expectations, and the intertwining of regulatory and compliance processes have become key catalysts driving this round of volatility. The market has repeatedly changed hands near historical highs, with dominance quickly switching between short-term funds and medium to long-term institutions, significantly amplifying price sensitivity to incremental capital and changes in sentiment.

Causes of Volatility and Capital Flow

● News: Recently, expectations surrounding the Federal Reserve's interest rate cut path have frequently fluctuated. Subtle changes in inflation and employment data have led the market to continuously adjust its pricing of the liquidity environment, becoming a direct trigger for Bitcoin's phase of intense volatility.
● ETF Capital: Research Brief shows that the U.S. spot Bitcoin ETF has experienced alternating daily net inflows and outflows during certain trading weeks, with single-day net inflow sizes fluctuating in the hundreds of millions of dollars range, and in extreme cases, single-day net outflows also reaching similar levels. This "positive-negative switching" rhythm is clearly faster than the unilateral net inflow phase in the first quarter of this year, indicating that institutional funds are more cautious and leaning towards trading at high levels.
● Quarterly Rhythm: In some weekly data, leading ETFs achieved cumulative net inflows of tens of billions of dollars over a period, but subsequently experienced several days of net outflows during the price peak phase, indicating that early entry funds began to realize profits while newly allocated funds became conservative.
● On-chain Capital: Brief points out that large on-chain transfers and exchange net inflows have shown signs of phase amplification recently, with the scale of Bitcoin inflows to exchanges significantly increasing during high volatility periods, reflecting that some long-term holders are choosing to test liquidity or reduce positions at high levels.
● Leverage Structure: Open interest (OI) in futures and perpetual contracts rose simultaneously during sharp price increases, with nominal contract values reaching hundreds of billions of dollars on certain trading days, while the subsequent flash crash was accompanied by large-scale long liquidations, with liquidation amounts reaching hundreds of millions of dollars within 24 hours, further amplifying the speed of price decline.
● Sentiment: Social media and derivatives pricing indicate that market FOMO and FUD sentiments are alternatingly dominant at high levels. The implied volatility of call options sharply increased in a short time, and the skew of options showed a significant rise in "put protection" demand on certain trading days, indicating that funds are chasing breakthroughs while increasing hedging efforts.
● Macro Correlation: Research Brief mentions that the correlation between Bitcoin and the Nasdaq, high-growth tech stock indices has phase-wise rebounded, and during a window of weakness in U.S. stocks and rising long-term yields, Bitcoin also experienced a synchronous pullback, reinforcing its pricing framework as a "high beta risk asset."

Deep Logic of Macro and Cycles

This round of volatility is not an isolated event but resonates with global liquidity expectations and the overall repricing of risk assets. When the Federal Reserve's policy outlook shifted from "rapid interest rate cuts" to a path of "slower or even delayed" cuts, market expectations for risk-free returns rose, prompting capital to phase out of overvalued, high-volatility assets, with Bitcoin naturally being the first to bear the brunt. At the same time, the spot ETF has introduced a large amount of medium to long-term institutional and compliant capital this year, making the price anchor no longer solely dominated by retail investors on exchanges. The passive buying and redeeming brought by the ETF's creation and redemption mechanism allow macro expectation changes to be reflected more quickly in the coin price. From an on-chain perspective, long-term holding addresses completed chip concentration and cost reduction at an earlier stage, while recent prices have oscillated in areas far above historical average holding costs, triggering the cash-out demand of long-term players, mismatching with the pace of new entry funds, forming an amplifying volatility "internal rotation." On the cyclical level, the halving event and its surrounding narrative have constructed a long-term bull market logic "ceiling" for bulls, but each upward test of new highs is accompanied by the accumulation of futures leverage and extreme sentiment, leading to healthy pullbacks and violent liquidations, which constitute the main theme of this round of market activity.

Core Divergence in Bull-Bear Game

● Optimists: They believe this high-level fluctuation resembles a continuation of the bull market. The cumulative net inflow of ETFs this year remains at the tens of billions of dollars level, indicating that the logic of compliant capital allocation has not reversed, only slowing down at high levels. After the halving, the annualized supply of newly produced Bitcoin further contracts, creating a structural supply-demand gap with the continuous absorption by ETFs. Optimists argue that the current pullback is more of a correction to the previously "overly front-loaded pricing of interest rate cut expectations," and once macro uncertainties ease, capital is expected to reassess Bitcoin's allocation value in asset portfolios.
● Pessimists: They are concerned that the combination of macro headwinds and regulatory uncertainties may trigger a deeper adjustment. On one hand, if inflation data fluctuates and long-term rates remain high, equities and high-volatility assets will face valuation compression; on the other hand, the tightening scrutiny of crypto-related products by regulators and restrictions on certain business models may affect the speed at which incremental capital enters through compliant channels. Pessimists also emphasize that current prices are still in a historically high range, with a high proportion of on-chain profit chips, and once a macro black swan occurs or ETFs continue to experience net outflows, the potential for further liquidation remains.
● Short-term Traders: They focus on asymmetric opportunities within the derivatives structure. During high volatility and when futures carry premiums widen, some quantitative and arbitrage funds choose to short futures and go long on spot or ETFs; conversely, during extreme pessimism and when futures discounts widen, they layout long positions to profit from funding rates and structural misalignments.
● Long-term Allocators: They view the recent volatility more as a window for structured accumulation or reallocation. According to Brief, some institutions see the deep price drop phase as a passive buying or rebalancing opportunity, averaging down costs through dollar-cost averaging or incremental accumulation while controlling overall position ratios to hedge against potential larger drawdown risks.

Market Outlook and Key Observation Points

In the short term, the market needs to focus on the evolution of several key variables: first, the direction and strength of continuous net inflows/outflows of the U.S. spot Bitcoin ETF; if significant net outflows occur over several days, it may suppress the height of price rebounds; second, the repricing of macro data and the Federal Reserve's public statements regarding the interest rate cut timetable. If expectations for risk-free rates rise further, the overall pressure on high-risk assets may continue. In terms of price, the lower support of the current high-level fluctuation range and the pressure near previous highs will become the core battleground for bull-bear capital games. Whether key support can be maintained during a volume pullback will directly affect the market's judgment of "bull market continuation" or "top formation." In the medium to long term, as long as the net absorption center of the ETF compliant entry remains fundamentally intact, combined with slowing output and increased institutional participation, the structural bull market framework for Bitcoin has not been overturned, but the path will be more tortuous, and volatility will be more challenging.

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