Bitcoin’s fall to $84,000 is less about mood than mechanics, says Greg Cipolaro, Global Head of Research at NYDIG. In a report, Cipolaro said the key drivers of the 2024-2025 rally had gone into reverse.
Spot Bitcoin ETFs, once the main source of demand in the cycle, are now showing persistent buybacks. These vehicles pumped billions into bitcoin during the first half of the year, the report points out, but five-day flows turned negative.
Data from SoSoValue shows that these ETFs are on track to record their highest monthly outflows since their launch, having lost $3.55 billion so far in November, just below the record outflow of $3.56 billion seen in February.
Read more: Bitcoin ETFs lost a record $3.79 billion in November
Aggressive capital flight
Stablecoins send a similar signal.
Total supply fell for the first time in months and algorithmic token USDE has lost nearly half of its bumper supply since the October 10 liquidation shock. NYDIG’s Cipolaro said this drop indicates money is leaving the market rather than sitting on the sidelines.
“Given its role in the sell-off, where it fell to $0.65 on Binance, its rapid contraction highlights how aggressively capital was being removed from the system,” he wrote.
The report suggests that other factors point to capital outflows.
Corporate treasury trades built around DAT stock premiums to net asset value also failed. As these premiums have turned into discounts, companies that once issued shares to buy Bitcoin are now selling assets or buying back shares. Sequans, for example, offloaded BTC earlier this month to reduce its debt.
“Importantly, while these reversals mark a clear shift from a once-strong demand driver to a potential headwind, no DAT has yet shown signs of financial distress,” Cipolaro emphasized. “Leverage remains modest, interest obligations are manageable, and many DAT structures allow issuers to suspend dividend or coupon payments if necessary.”
Large purchases of bitcoin during the decline, including those from Strategy and the country of El Salvador, failed to stop the price decline. For Cipolaro, “the fact that these large purchases did not even slow the decline is telling.”
He argued that these reversals form a feedback loop triggered by the $19 billion liquidation on October 10. The mechanisms that once pushed prices upward are now reinforcing the decline.
He said investors should “hope for the best, but prepare for the worst,” noting that “the long-term thesis still stands, but the short-term environment could be shaped by well-worn cyclical mechanisms.”
“History suggests that the next step could be fraught with challenges, but secular conviction remains an important asset for long-term investors,” Cipolaro added.
Read more: Cryptocurrency liquidity still hollow after October crash, risking sharp price swings
