Bitcoin has been experiencing a persistent decline, moving sideways within a narrow range over the past few weeks. Every attempt to push prices higher has been met with immediate selling pressure.
Data from the market reveals that investors who purchased near Bitcoin’s peak levels, especially around early October, are treating price surges as chances to offload their holdings.
According to Glassnode, a cryptocurrency analytics firm, multiple signals point toward a “mild bearish phase” in the crypto market. The firm highlights that limited capital inflows are insufficient to offset ongoing selling by large holders. Prices remain trapped in what they describe as a “weak but constrained range,” causing unrealized losses to accumulate. The relative unrealized loss rate has climbed to 4.4%, marking its highest point in two years and signaling a shift from prior optimism toward growing stress and uncertainty among investors.
Alex Kuptsikevich, senior analyst at FxPro, contends that cryptocurrencies have effectively entered bear market territory. He warns that any attempts at recovery might provoke fresh waves of selling activity.
The largest digital currency is set for an almost flat weekly close but has shed roughly 30% of its value since hitting an all-time high near $126,000 on October 6th.
In recent observations, Bitcoin’s price movements have mirrored other risk assets during downturns but failed to rally alongside them during recoveries—indicating a breakdown in its usual positive correlation with broader markets. Analysts attribute this divergence partly to weak liquidity conditions and diminished risk appetite following the US Federal Reserve’s interest rate cut last Wednesday which did not generate expected gains for digital assets.
Glassnode also points out that implied volatility has contracted recently; historically such tightening intensifies after major macroeconomic events like the December 10 FOMC meeting—the final significant event on this year’s calendar. Unless there is an unexpected hawkish move by policymakers, volatility could decrease further towards year-end as gamma sellers re-enter markets—participants who typically benefit from sideways price action but face risks amid sharp fluctuations due to their options positions—potentially ushering in periods characterized by low liquidity and mean-reverting returns.
Mitch Galer of GSR emphasizes how macroeconomic factors increasingly influence cryptocurrency pricing dynamics nowadays. He notes complications arising from restricted Fed access caused by the US government shutdown alongside uncertain policy directions and geopolitical tensions—all contributing recently amplified effects on trading flows typical of bear markets. While short-term volatility may stay elevated, Galer suggests sentiment might improve late this year given current excessive pessimism among traders.
Conversely, Timothy Misir — research director at BRN Digital Asset Analytics — cautions that present stability rests on precarious foundations: fragmented ETF flows combined with thin liquidity imply the sector remains indecisive rather than establishing clear momentum or trend direction going forward.
This content does not constitute investment advice.