Most institutions believe that the market structure of Bitcoin and the crypto market is similar to that of the first quarter of 2022.
1. The proportion of BTC losses and the scale of losses are the same as in the first quarter of 2022.
Similar to 2022, $BTC is experiencing a critical zone of whether it formally turns bearish, with the number of trapped positions starting to increase rapidly.
According to on-chain data, over 25% of the total supply of BTC is currently in a floating loss state, with approximately 5–7 million BTC in a loss state,
with a maximum of 7.1 million BTC in floating losses, almost identical to early 2022.
2. The flow of funds has become very weak.
The current monthly inflow of BTC is only 8.6 billion USD, a significant decrease compared to 64.3 billion USD in July of this year. Of course, the good news is that it has not temporarily turned into negative inflow (outflow).
In fact, the current situation is similar to the funding situation in 2022; funds have not completely disappeared, but the incremental funds are unable to support the previous high valuations.
3. Long-term holders are still selling for profit, but profit margins are sharply contracting.
Some institutions believe that the current period is a digestion phase for BTC's bearish trend in the second half, with long-term funds continuously selling off while profit margins continue to decline, still similar to 2022, but long-term funds have not yet entered the trapped stage.
4. The impact of macroeconomic conditions and liquidity shocks is beginning to increase rapidly, similar to the interest rate hike cycle of 2022, except that it was affecting OTC at that time, and currently it is impacting spot ETFs.
5. The market has entered a chronic deleveraging phase.
As time progresses, long positions are being gradually eliminated, but it is difficult to see extreme long liquidations in the market and news anymore.
6. Altcoins have completed structural retreats, being washed out before BTC.
In just November, the Memecoins sector driving the market has retraced about 66% from this year's peak, and altcoins have entered a phase of no capital inflow, with altcoin projects entering a washout and survival phase.
It is worth noting that even though the current market structure is similar to Q1 2022, BTC and the altcoin market have an additional demand channel in the form of spot ETFs. Additionally, without a time bomb like 3AC, the systemic risk of on-chain credit/lending is much smaller than in 2022.
At the same time, the macroeconomic environment is in a rate-cutting cycle, and macro liquidity may not necessarily be poor. Therefore, a major crash may not occur, and the crypto market is likely to be in a state of low volatility and gradual decline, which may last until the end of 2026.
