Crypto has been a bit of a roller coaster ride in the past couple months.
Bitcoin’s value has dropped by nearly half from its peak of $125,000 in October 2025 to as low as $60,000 at the beginning of February.
There are many discussions about hype, fear, fatigue and fundamentals. The tone of the markets has been strangely subdued.
This contrast will help you to understand what is really going on and where we are headed.
Macro backdrop changed the rules
Crypto was introduced in late 2025 at a price that would be compatible with a macro-environment friendly.
The market was expecting rate cuts, the liquidity situation would improve and there were strong risk appetites for digital and equity assets.
The turn of the new year brought about a dramatic change. The Federal Reserve signaled patience, not urgency. Real yields were elevated.
Once again, risk-free investments offered competitive returns to speculative assets.
Bitcoin was now no longer a small niche market.
The same basket of high-growth stocks and risk assets was now included in the macro portfolio.
Prices adjusted when expectations of easier financial conditions were not met.
The crypto-space was more affected by this adjustment due to the volatility of its price and position.
The marginal buyer has walked away
The rise of Bitcoin spot ETFs has been one of the biggest changes in the last two years.
These products were a constant bid throughout 2024, and for much of 2025. They attracted institutional capital which had previously been on the sidelines.
This flow was important because it was persistent and incremental.
This dynamic will reverse in January 2026. Data from ETFs revealed significant net outflows in recent weeks.
It was not a loss of confidence in Bitcoin’s prospects on the long term, but rather a change of portfolio behavior.
When volatility increases, institutions rebalance and reduce their exposure. They also respond to macro-signals.
As soon as that constant source of demand faded away, the market needed to come up with a new price for clearing.
Exchange data also showed that Bitcoin was moving more to trading platforms, which is a trend often linked with short-term sales.
It was not necessary to create dramatic headlines in order for the combination of lower inflows with rising supply to cause downward pressure.
Leverage accelerated the speed. Futures open interest, options positions, and traders’ expectations for further gains were all elevated by the year 2025.
Liquidations began as prices started to fall. As prices began to fall, liquidations followed.
The reason why crypto moves often seem abrupt is because of this process. Although the underlying changes were gradual and tied to macro-conditions and flows, derivatives markets compressed this adjustment into days instead of months.
As leverage is cleared, prices begin to trend sideways instead of straight down.
Who sold what and who didn’t?
Chain data indicates that not everyone reacts the same during drawdowns.
The coins that changed hands during this sale were those which had been acquired the year before.
Investors who bought into this rally after the election were attracted by rising prices, optimism about policy, and momentum.
Different behavior was observed in long-term investors. The supply held by long-term holders barely moved.
Some early adopters, as well as long-term supporters of the product or service, have never bought anything. Many early adopters and long-term believers were neither buyers nor sellers.
The margins, and not the core of the market were the source of selling pressure.
The same pattern explains how prices can fall rapidly without causing a chaotic collapse.
Even as more participants left, the base ownership of existing companies remained unchanged.
The enthusiasm is replaced by fatigue
Early crypto cycles are characterized by rapid rebound. The price recovered quicker than anticipated, as dips were aggressively bought, stories were quickly regenerated, and the prices recovered.
It felt like a different time. There is no panic, but there’s also little excitement.
Confident in their theory, long-term investors did not add additional exposure. After absorbing losses, newer investors became more cautious.
This has led to a thin market rather than a heavy one. In this situation, markets tend to be erratic and frustrating rather than crashing and recovering.
The same fatigue can also explain why the familiar stories that have been told about prices not rising. Bitcoin behaved differently than digital gold in the current global uncertainties.
Bitcoin was struggling, and the capital flowed to actual gold.
The same was true for political support and positive rhetoric. After expectations surpassed reality, the post-election premium ceased to exist.
The data tells us what to expect next
The most important signals for the future aren’t narratives, but rather constraints. Liquidity is the number one constraint.
Crypto is unlikely to experience the same reflexive rise it experienced in previous easing cycles as long as rates are high and central banks continue to signal caution, rather than urgency.
In the past, Bitcoin recoverys have been sustained when real returns or balance sheet growth has declined. Today, neither condition has been met.
The flow of money is a good second indicator. ETF data is now a referendum every week on the appetite of institutions.
Inflows are important, but stabilisation is more important. Prices have been influenced by periods where assets under management and outflows have flattened.
The picture would be changed if the bid was renewed, but only episodic purchases have not been sufficient to change broader trends.
The position also appears to be better than three months earlier. The open interest in futures is down, the funding rate has a more balanced distribution, and there’s less demand for upside leverage on options.
This reduces the likelihood of another steep leg-down due to liquidation, but it also slows down any upward movement. Clear leveraged markets tend to be slower, and less dramatic.
Long-term holding behaviour is the silent constant on the supply side. Even at the current price, coins held for many years are not moving much.
This has traditionally created a spongy floor beneath the market. However, floors can be stretched sideways over long periods. It isn’t belief that is lacking, it is urgency.
This implies that the market is more inclined to contract than move in a trend. Trading in ranges, rotating between Bitcoin and tokens with large capitalizations and being sensitive to macro-data releases is more likely than a return to the highs.
This phase of the cycle has only ended in previous cycles when a major external factor changed, such as monetary conditions, or an entirely new demand source.
Crypto is now acting less as a frontier and more mature asset.
Prices are more responsive to flows and rates than they are to slogans. This does not weaken the asset. This makes the asset more readable.
As new information becomes available, this post Bitcoin crash: the macroeconomics of money, missing urgency and lack of urgency will be updated.
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