Bitcoin News Today: Feedback Loop Fuels Bitcoin's Decline Despite Long-Term Optimism

Bitcoin's demand engine is reversing as spot ETF outflows, stablecoin contractions, and corporate treasury shifts signal capital flight from the crypto market, according to NYDIG's analysis. Yet, long-term bullish fundamentals remain intact, with market participants advised to brace for a turbulent near-term environment.

The recent $520 million redemptions from BlackRock's IBIT ETF—its largest monthly outflow since launch—highlight a structural shift in institutional behavior. What once acted as a stabilizer for Bitcoin's price is now amplifying downward pressure, as ETFs no longer offset selling waves. Technical indicators corroborate this trend: IBIT broke its key trendline, and Bitcoin's price now languishes below critical moving averages, reinforcing bearish momentum.

Capital flight is also evident in the stablecoin sector, where total supply has declined for the first time in months. The algorithmic USDE token, for example, lost nearly half its supply after the October 10 liquidation crisis, signaling aggressive liquidity extraction. Meanwhile, digital asset treasuries (DATs), which previously issued shares to buy Bitcoin, are now selling assets or repurchasing shares to cut debt, as seen with Sequans.

These reversals form a feedback loop, NYDIG's Greg Cipolaro argues. The October 10 liquidation event—which wiped $19 billion in crypto value—triggered a chain reaction where mechanisms that once drove prices higher now reinforce declines. "The long-term thesis is still alive, but the near-term environment may be shaped by well-worn cyclical mechanics," Cipolaro wrote.

Despite the downturn, signs of resilience persist. Bitcoin dominance (BTC.D) has dipped to 58.8%, its lowest since December 2024, while the Altcoin Season Index hit a one-month high. Analysts suggest this could either signal a deeper market reset or a rotation toward riskier assets. "BTC.D is finally flipping bearish again on the weekly chart," noted ChartingGuy, pointing to a potential head-and-shoulders pattern that could drive further declines in Bitcoin's share of the market.

The market's broader context is equally telling. Bitcoin's price fell below $87,000 in late November, triggering over $914 million in liquidations, with long positions accounting for 78% of the losses. However, historical patterns and retail sentiment suggest a rebound is possible. Santiment's data shows retail traders predicting a drop below $70,000, but the market often moves contrary to such extreme fear.

For now, the focus remains on Bitcoin's ability to reclaim key levels. A close above $100,000 on the weekly chart would signal a bullish reversal, while a descent into the $72,000–$78,000 range could trigger a "cycle reset" as long-term holders reaccumulate. Institutions, meanwhile, are recalibrating strategies, with some exploring Bitcoin-native yield opportunities as passive accumulation wanes.