Bitcoin's On-Chain Bearish Signals and the Role of Macro Liquidity in the Next Market Move

In late 2025, Bitcoin faces a confluence of bearish on-chain signals and macroeconomic headwinds, creating a complex environment for long-term investors. While the asset has shown resilience amid liquidity-driven rebounds, the interplay between structural on-chain weakness and shifting macro conditions demands a disciplined approach to risk management. This analysis synthesizes on-chain data and macroeconomic trends to outline a strategic framework for navigating Bitcoin's current phase.

On-Chain Bearish Signals: A Structural Warning

Bitcoin's on-chain metrics paint a starkly bearish picture. The Bull Score Index, a composite indicator of market sentiment, has fallen into the 20–30 range-a level historically associated with deep bear markets according to data. Exchange reserves for Bitcoin have declined from 2.4 million BTC to 1.82–1.83 million BTC between November 21 and 27, 2025, signaling reduced liquidity and heightened sensitivity to selling pressure. Meanwhile, the MVRV (Market Value to Realized Value) ratio remains moderate, suggesting accumulation but not capitulation, while active addresses and transaction volumes have dropped sharply since Q1 2025, reflecting investor caution.

Short-term holders (STHs) are particularly stressed, with a loss ratio of 0.07x indicating widespread underwater positions according to analysis. This fragility is compounded by declining whale accumulation patterns and increased movement to exchanges, further reinforcing the bearish narrative. Collectively, these signals suggest that Bitcoin's fundamentals lack the strength to sustain a prolonged upward trend unless external liquidity conditions improve.

Macro Liquidity: A Double-Edged Sword

The Federal Reserve's policy shifts have introduced both risks and opportunities. According to reports, the termination of quantitative tightening (QT) and large-scale liquidity injections by the New York Fed in late 2025 provided a short-term tailwind, supporting Bitcoin's rebound above $93,000. Market expectations of a 25-basis-point rate cut at the December 10 FOMC meeting-assigned an 88.8% probability by the CME FedWatch Tool-further stabilized risk assets. Institutional developments, such as Vanguard Group opening its brokerage platform to crypto ETFs, also triggered inflows and increased open interest in Bitcoin futures by 12% week-over-week according to analysis.

However, global inflation trends and liquidity contractions pose persistent challenges. Bitcoin's liquidity has thinned, with order book depth falling to $568.7 million, exacerbating volatility. According to analysis, elevated U.S. interest rates and a "taxed liquidity" environment-where government debt issuance siphons capital from speculative assets-have constrained Bitcoin's appeal as an inflation hedge. Additionally, the yen carry trade unwind and synchronized declines with tech stocks highlight the asset's growing correlation with traditional markets.

Strategic Risk Management for Long-Term Investors

For long-term investors, the current environment demands a balanced approach that mitigates downside risks while positioning for potential rebounds.

1. Diversification and Position Sizing: Given the fragility of Bitcoin's on-chain fundamentals, investors should avoid overexposure. Allocating a portion of capital to Bitcoin while maintaining a diversified portfolio of macro-hedged assets (e.g., gold, equities with low beta) can reduce vulnerability to liquidity shocks according to market analysis.

2. Hedging Against Macro Shocks: The heightened sensitivity of Bitcoin to interest rate changes and liquidity conditions necessitates hedging strategies. Instruments like inverse Bitcoin ETFs or short-term U.S. Treasury bonds can offset potential losses during rate hikes or liquidity contractions according to analysis.

3. Monitoring On-Chain and Macro Indicators: Investors should closely track metrics such as the Bull Score Index, exchange reserves, and ETF flows to identify inflection points. For instance, a sustained improvement in the Bull Score Index or a reversal in ETF outflows could signal a shift in market dynamics.

4. Patience and Discipline: While the bearish on-chain environment is concerning, historical patterns suggest that corrections often precede strong rebounds. Investors with a long-term horizon should avoid panic selling and instead focus on accumulating Bitcoin at discounted levels, provided macro conditions align with a recovery.

Conclusion

Bitcoin's current phase is defined by a fragile on-chain structure and macroeconomic uncertainty. While bearish signals dominate, the interplay between liquidity-driven rebounds and institutional adoption creates opportunities for strategic investors. By prioritizing risk management-through diversification, hedging, and disciplined monitoring-long-term investors can navigate the volatility while positioning for a potential upcycle. As the market awaits key macroeconomic catalysts, patience and adaptability will remain critical.