TLDR
Bitcoin ETFs have reversed from inflows to outflows, with $3.55 billion leaving in November alone, marking near-record capital flight
Stablecoin supply dropped for the first time in months, with USDE losing nearly half its supply since October’s liquidation event
Digital asset treasury companies have seen their share premiums collapse to discounts, forcing some to sell Bitcoin or buy back shares
The October 10 liquidation event triggered $19 billion in losses and broke the demand loop that drove Bitcoin’s rally
NYDIG maintains Bitcoin’s long-term outlook remains positive despite current market mechanics driving prices down
Bitcoin’s recent price decline to around $84,000 stems from market mechanics rather than investor sentiment, according to research from NYDIG. The same forces that pushed Bitcoin to new highs earlier this year have now reversed direction.
Greg Cipolaro, NYDIG’s head of research, released a report Friday explaining how the market’s key demand drivers have shifted. The analysis points to actual capital leaving the cryptocurrency market rather than just negative sentiment.
Spot Bitcoin exchange-traded funds led the charge during Bitcoin’s rally in early 2025. These funds brought billions of dollars into the market during the first half of the year. That trend has now completely reversed.
November data shows Bitcoin ETFs are experiencing their worst month since launch. The funds have recorded $3.55 billion in outflows so far this month. This amount nearly matches the previous record of $3.56 billion set in February.
The five-day trailing flows for these ETFs have turned negative. What was once the primary source of demand has become a headwind for Bitcoin prices.
Stablecoin Supply Signals Market Exit
Stablecoin metrics tell a similar story about capital movement. Total stablecoin supply has decreased for the first time in months. The algorithmic stablecoin USDE has lost nearly half its outstanding supply since October 10.
USDE fell to $0.65 on Binance during the October liquidation shock. Cipolaro noted this rapid contraction shows how quickly capital has been pulled from the system. The decline represents actual money leaving rather than sitting on the sidelines.
Digital asset treasury companies also face pressure. These firms previously issued stock to purchase Bitcoin when their shares traded at premiums to net asset value. Those premiums have now flipped to discounts.
Companies have responded by changing strategy. Some are selling Bitcoin holdings or buying back shares instead. Sequans recently sold Bitcoin to reduce debt obligations.
The shift affects corporate treasury strategies across the sector. However, Cipolaro emphasized no digital asset treasury has shown signs of financial distress yet. Leverage remains modest and interest payments are manageable.
Liquidation Event Breaks Demand Loop
The reversal traces back to an October 10 liquidation event. This event saw $19 billion in liquidations across the crypto market. The shock triggered a cascade of effects through market structure.
Exchange-traded fund inflows stopped and reversed. Treasury company premiums collapsed. Stablecoin supply began declining. These changes signal liquidity leaving the entire system.
Cipolaro explained this pattern matches previous Bitcoin cycles. The reflexive loop that pushes markets up eventually breaks. When it does, markets follow a predictable sequence.
Liquidity tightens first. Leverage attempts to reform but struggles to gain traction. Previously supportive narratives stop translating into actual money flows. The mechanics remain the same across cycles even as stories change.
Even large Bitcoin purchases failed to stop the decline. Strategy and El Salvador both bought Bitcoin during the dip. Their purchases did not slow the price drop.
Cipolaro said this fact is telling. It demonstrates how powerful the reversal has become. The feedback loop now reinforces declines instead of rallies.
Bitcoin Dominance Rises During Drawdown
Bitcoin dominance has increased during the drawdown. The metric measures Bitcoin’s share of total cryptocurrency market value. It rose above 60 percent in early November.
Bitcoin dominance currently sits around 58 percent. Cipolaro said this pattern repeats during cyclical drawdowns. Capital consolidates back into the most established and liquid crypto asset.
Speculative cryptocurrencies tend to decline more aggressively during these periods. Investors move back to Bitcoin as the safest option within crypto markets.
The long-term outlook for Bitcoin remains unchanged according to NYDIG. Institutional adoption continues growing. Sovereign interest is building slowly. Bitcoin’s role as a neutral monetary asset stays intact.
Cipolaro warned investors to prepare for volatility ahead. Past cycles suggest the path forward will be uneven and emotionally taxing. Sudden dislocations may occur.
Digital asset treasury structures allow issuers to suspend dividend or coupon payments if needed. This flexibility provides a buffer during market stress. The sector has runway before actual financial stress becomes a concern.
