According to Greg Cipollaro, Bitcoin’s slide is being driven less by mood and more by mechanics. Global Head of Research at NewDig. In a report, Cipolaro said the core engines for the 2024–25 rally have been reversed.
Spot Bitcoin ETFs, once a main source of cyclical demand, now show consistent redemptions. The report notes that these vehicles pumped billions into bitcoin during the first half of the year, but the five-day flow has been left behind.
Data from Sosolo It shows that these ETFs are on track to register their highest monthly outflows since launch, with losses of $3.55 billion so far in November, just shy of the record outflows of $3.56 billion seen in February.
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Offensive capital flight
Stablecoins are flashing a similar signal.
Total supply has fallen for the first time in months, and the algorithmic USDE token has lost half of its outstanding supply following a liquidation shock on October 10. Nidig’s Cipollaro said the drop points to money exiting the market rather than going to the curb.
“Given its role in Self, where it hit $0.65 on Binance, its rapid contraction indicates how aggressively capital has been pulled from the system,” he wrote.
Other factors point to capital outflows, the report said.
Corporate treasury trades built around the DAT share premium relative to net asset value have also broken down. As those premiums flipped on discounts, firms that once issued stock to buy bitcoin are now selling assets or buying shares. For example, Sequences unloaded BTC earlier this month to reduce debt.
“Importantly, while these reversals indicate a clear shift from a once-strong demand engine to potential headwinds, no DATs have yet shown signs of financial distress.” “Leverage remains modest, interest obligations are manageable, and many DAT structures allow issuers to suspend dividend or coupon payments if needed.”
Large purchases of Bitcoin during the DIP, including strategic ones and those from the country of El Salvador, failed to stem the price decline. For Cipolaro, “the reality is that these massive purchases didn’t even slow down the decline.”
He argued that these fluctuations formed a feedback loop through the $19 billion liquidation event on October 10. Mechanisms that once drove prices are now fueling the decline.
In his view, investors should “hope for the best, but prepare for the worst,” saying that “the long-term thesis is still alive, but the near-term environment may be shaped by well-worn cyclical mechanics.”
“History shows that the next stretch can be very difficult, but secular punishment remains a key asset for long-term investors,” Cipolaro added.
Read more: Crypto liquidity still shallow after October crash, prompting price spikes