On January 3rd, Eastern Standard Time, Bitcoin's intraday price fell below the $100,000 mark, dipping to around the $92,000-$94,000 range, marking a maximum retracement of over 30% from the $138,000 historical high set in November 2025. This round of correction, which began from the high point, has lasted for over a month, sparking intense discussions in the market about whether the bull market has peaked, whether new funds are withdrawing, and whether the logic of ETFs and halving has been prematurely priced in. Meanwhile, expectations for interest rate cuts from the Federal Reserve and the soft landing of the U.S. economy have fluctuated, leading to increased volatility in global risk assets. Bitcoin's "parabolic" trend at high levels has been quickly corrected, prompting the market to reassess how much of the previous series of "narrative stacking"—spot ETF volume, halving supply contraction, institutional allocation, and AI/RWA concept resonance—has already been reflected in the price and how much future space remains.
Multiple Factors Resonating: The Financial and Macroeconomic Signals Behind the Price Retracement
● Price and Volatility: Since reaching approximately $138,000 in November 2025, Bitcoin has retraced over 30%, repeatedly falling below the $100,000 psychological threshold. The daily price fluctuation has significantly expanded from the previous 5%-7% range to 10%-15%, and the implied volatility index has quickly risen from low levels, with options IV increasing by over 20 volatility points in just two weeks.
● ETF Fund Flows: The U.S. spot BTC ETF recorded a peak net inflow of over $2 billion in a single day in Q4 2025, with total assets under management (AUM) surpassing $400 billion; entering January 2026, the average daily net inflow has noticeably cooled to the $100 million-$300 million range, with some trading days even experiencing net outflows of several hundred million dollars, indicating a phase of reduced passive allocation and increased profit-taking at high levels.
● Leverage and Derivatives: The long leverage in the perpetual contract market significantly amplified during the high phase in November, with funding rates maintaining a hot level of 0.05%-0.08%/8 hours for an extended period; during the recent downturn, the daily forced liquidation volume across the network surged to the scale of several billion dollars at certain points, with long positions being liquidated at a significantly higher rate than short positions. The open interest (OI) has fallen by about 20%-30% from its peak, indicating a concentration of deleveraging in the leverage chain.
● On-chain and Spot: On-chain data shows that the average holding cost for short-term holders is concentrated in the $110,000-$130,000 range, and the current price has dipped below the cost range of many short-term chips, significantly amplifying the realized losses for short-term addresses. In contrast, long-term holders (addresses holding for more than 155 days) still maintain over 70% of their supply untouched, contributing to downward support from the static locking of long-term chips.
● Macroeconomic Liquidity: Since the second half of 2025, the Federal Reserve has repeatedly signaled a pause in interest rate hikes and a shift towards rate cuts. The market briefly anticipated a rate cut cycle starting in the first half of 2026 in November, driving both U.S. stocks and crypto assets to new highs; however, entering December, U.S. economic data and inflation readings fluctuated, leading to a retraction in the implied rate cut expectations in federal funds futures. The yield on 10-year U.S. Treasuries has oscillated in the 3.8%-4.2% range, and global liquidity sentiment has become more cautious.
● Performance of Related Assets: Ethereum retraced from above $6,000 to around $4,500, with a decline of nearly 25%; mainstream AI and RWA sector tokens generally fell back 30%-50% from their highs this year, and the Nasdaq also experienced moderate adjustments from its peak, indicating that this round of risk appetite cooling is not limited to a single asset but is a cross-market repricing of multiple assets.
This adjustment of Bitcoin from its high is not merely a "black swan" triggered by a single negative news event, but rather a systematic correction in a state of high valuation, high positioning, and high sentiment following a continuous rise. Over the past year, the approval and continuous expansion of spot ETFs, combined with the fourth halving occurring in mid-2025, have led to the "supply contraction + compliant increment" narrative being traded in advance, propelling Bitcoin from around $60,000 to nearly $140,000. At the same time, contract leverage and on-chain short-term funds surged at high levels, leading to a premature overextension of prices against positive expectations. When macro liquidity expectations show marginal fluctuations, ETF increments slow down, and short-term funds begin to realize profits, the price correction for this round of "overpriced expectations" manifests as a deep retracement of over 30%. During this phase, Bitcoin is gradually transitioning from a purely "policy and narrative-driven" asset to a high-beta target influenced by liquidity, risk appetite, and valuation constraints within the global asset pricing framework.
Intensifying Divergence: The Clash Between Top Theories and New Cycle Theories
The market's interpretation of this round of falling below $100,000 has shown a clear split. The relatively pessimistic side believes that Bitcoin has fully or even excessively priced in the long-term benefits of halving and ETFs: historically, it often takes several months or even a year after halving for prices to gradually reflect the bull market through changes in supply and demand structure. However, this time, leveraging the accelerated volume of ETFs, the price surged from $60,000 to nearly $140,000 in less than a year around the halving. Such a time compression means that a significant portion of medium- to long-term buying has been "pulled forward," potentially leading to a significant slowdown in marginal new demand over the next one to two years. Additionally, from a macro perspective, the Federal Reserve's path to rate cuts is not as linear as the market consensus at the beginning of the year; persistent inflation and economic resilience may keep rates hovering at relatively high levels for longer, making it difficult for the global liquidity environment to support a continuous repricing of risk assets. The risk is that if the U.S. economy falls into a "stagflation" or a downturn where rates cannot be lowered, both high-valuation tech stocks and high-volatility crypto assets will face dual pressures on valuation and funding.
In contrast, optimists emphasize that from a longer-cycle perspective, this round of falling below $100,000 is more likely a healthy reshuffling in the middle of a bull market rather than a declaration of a major cycle top. They argue that the significance of ETFs lies not only in short-term fund flows but also in providing Bitcoin assets with a long-term, transparent, and compliant allocation channel, gradually leading them into pension funds, family offices, and broader institutional balance sheets. The number of ETP and ETF products being filed and issued in markets such as Europe, the U.S., and Japan continues to increase, and the AUM share of related products globally remains at a very low level compared to traditional assets. Even if the growth rate slows, the structural trend of "increasing penetration" has not changed. Additionally, from on-chain and holding structure perspectives, the proportion of locked chips among long-term holders remains at historically high levels, indicating that large funds have not systematically reduced their positions but that this round of adjustment has been dominated by short-term high-leverage funds. Optimists thus propose that Bitcoin is evolving from a purely "speculative high-volatility asset" into a hybrid with characteristics of both "digital gold" and high-growth tech assets, with medium- to long-term risk premiums having room to decline. The increase in institutional allocation ratios will become a more critical pricing anchor, and such structural changes are often not reversed by a few months of intense volatility.
In the short term, the market's focus will be highly concentrated on the changes in several key variables. First is the fund flows of U.S. and European spot ETFs; if the net outflows in the coming weeks are merely a phase of profit-taking rather than a sustained structural redemption, this round of adjustment is more likely to find mid-term support in the $80,000-$90,000 range. If funds experience large-scale net outflows for several consecutive weeks, caution is warranted that "high-level distribution" may evolve into a longer-term price reassessment. Second is the Federal Reserve's policy path and the direction of U.S. economic data; if inflation returns to a moderately declining trajectory and the labor market achieves a soft landing rather than a hard slowdown, there may be room for rates to move downward in 2026, which would provide a window for valuation expansion for risk assets, including Bitcoin. Third is the pace of repair for on-chain and derivative leverage: as funding rates and implied volatility gradually return to normal and short-term speculative chips are fully cleared, Bitcoin is expected to enter a new phase of volatility on a healthier leverage structure. Overall, this round of falling below $100,000 serves as both a "check-up" for the previous rapid rise and a stress test for the narrative value of ETFs and halving. The market will ultimately provide an answer to the question of whether this is a "bubble squeeze or the starting point of a new cycle" through time and price.
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