Key conclusions:
-
Bitcoin’s fundamentals remained intact despite the crypto market’s $1 trillion drop in total market capitalization.
-
Long-term holders and institutional investors continue to absorb Bitcoin’s distributed supply.
-
Analysts argue that the decline is structural, driven by leverage and rotations, rather than bearish sentiment.
The crypto market has wiped out more than $1.1 trillion in value in the past 41 days, an average loss of a whopping $27 billion per day, according to the letter to Kobeissa. However, analysts argue that this is not a bearish collapse, but rather a structural reset driven by leverage, liquidity rotation and mechanical market flows.
According to Kobeissi’s letter, drop is a strange anomaly due to the absence of a major negative fundamental catalyst. US political leadership has expressed strong pro-crypto sentiment, yet Bitcoin (BTC) is still down 25% in a month. The bulletin attributes the decline to institutional outflows that began in late October, followed by a cascade of leveraged liquidations. Since many traders operate with 20x–100x leverage, even a 2% move can trigger a massive wipeout, fueling hyperactive volatility.
Likewise, John D’Agostino, Head of Institutional Strategy at Coinbase, confirmed the view that the decline is mechanical rather than fundamental, arguing that nothing material has worsened in the crypto’s fundamental picture since late September. Instead, several major events have actually strengthened the long-term thesis.
In a recent segment of CNBC’s Squawk Box, D’Agostino recorded that the Czech National Bank recently became the first eurozone central bank to buy Bitcoin, a significant sign of sovereign adoption. At the same time, companies like Citibank and JPMorgan have begun launching and testing stablecoins to facilitate global customer transactions, a step that would have been “unthinkable” during previous market cycles.
The Coinbase CEO added that crypto ETFs continue to perform well, with the Solana ETF having the best ETF launch of the year, further confirming institutional demand despite price volatility. From a regulatory standpoint, the environment is no worse than it was before October, with global jurisdictions maintaining or expanding pathways for compliant crypto activity.
From a strategy standpoint, D’Agostino said that if investors believe in the fundamental value of Bitcoin, the current environment reflects buying goods at discounted prices at the supermarket.
Related: Strategy Increases Bitcoin Buy With 8178 BTC Buy
BTC’s structural change begins as selling pressure eases
Glass node recorded that distribution pressure is finally easing in several cohorts of key holders after weeks of heavy selling, a potential early sign that the most aggressive bidding has fallen behind with BTC already 25% off its highs.
CryptoQuant data reinforced this narrative with long-term “price insensitive” holders absorbing 186,000 BTC since October 6, the largest increase in recent cycles. Historically, such spikes precede major rallies, but this time the price fell, creating a rare divergence. Analysts currently see two highly probable outcomes:
-
Strong growth as supply dries up and smart money distributes more and more.
-
A final rinse, cleaning up any residual appetite before a permanent trend is formed.
Either way, the signal is clear: long-term equity is entering the scene as sentiment falls, and such divergences “never last long.”
Related: A rare bitcoin futures signal could catch traders off guard: Is a bottom forming?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
About the Author
