Bitcoin Is Increasingly Trading Like a Macro Asset

Bitcoin is no longer behaving like a purely crypto-native asset. Increasingly, it trades like a macroeconomic instrument.

Over the past two weeks, Bitcoin’s price action has reflected macro developments far more than crypto-specific catalysts. Expectations around interest rates, the strength of the US dollar, and overall liquidity conditions have become the dominant forces shaping direction.

Tariffs sit at the center of this equation. They can increase import costs, creating inflationary pressure. That, in turn, complicates the outlook for central bank policy.

When markets begin to price in the possibility of higher rates for longer, a chain reaction tends to follow. The dollar strengthens first. Liquidity tightens globally. Risk assets begin to lose momentum. Bitcoin, despite its independent structure, does not remain immune.

Trump’s statement did not directly trigger this sequence. But it reactivated the possibility in investors’ minds. That alone was enough to shift positioning.

The Real Reason Behind Bitcoin’s Decline

In simple terms, the reason behind Bitcoin’s decline can be traced back to renewed tariff expectations and their potential macroeconomic consequences.

Rising tariff risks increase the likelihood of persistent inflation. This makes it harder for the Federal Reserve to cut interest rates quickly. A stronger dollar follows. As a result, investors rotate away from risk-sensitive assets, placing pressure on Bitcoin.

US Trade Deficit Data Adds Context, But Questions Remain

There is also real data behind the broader trade narrative. In January, the US trade deficit fell sharply to approximately $29.4 billion, one of the lowest levels since 2009.

Lower imports and stronger exports contributed to the shift. Tariff threats themselves may have already begun influencing supply chains and corporate behavior.

However, economists caution that the headline improvement does not necessarily reflect a fully structural change. Certain components, including non-monetary gold flows, may have exaggerated the decline. Beneath the surface, the underlying trend may be less stable than the headline suggests.

Markets recognized this distinction quickly. The focus shifted away from the number itself and toward whether tariff policies would continue shaping financial conditions.

Strong Dollar and Geopolitical Risks Continue to Pressure Bitcoin

Despite Bitcoin’s recent rebound toward the $67,000 level, the broader trend remains fragile. The crypto market is currently on track for its fifth consecutive weekly decline.

If confirmed, it would mark the longest losing streak since the nine-week drawdown recorded between March and May 2022.

Geopolitical risks continue to reinforce dollar strength. Rising military tensions in the Middle East have pushed both the US dollar and oil prices higher.

A stronger dollar historically creates headwinds for Bitcoin, given their inverse relationship. In this environment, Bitcoin’s short-term direction is increasingly tied to global macroeconomic forces rather than internal crypto developments.

When liquidity expands, Bitcoin responds quickly to the upside. When conditions tighten, it retreats just as fast.,

Fed Minutes Released: Is a Rate Cut on the Horizon?

What Comes Next for Bitcoin?

Markets are now watching one critical question: whether tariff rhetoric evolves into sustained financial tightening, or fades into political noise. If tariffs ultimately reinforce expectations of a stronger dollar and prolonged high interest rates, Bitcoin’s upside may remain constrained.

If the narrative loses momentum and financial conditions begin to ease, Bitcoin could regain strength through renewed liquidity flows.

What is clear is that Bitcoin’s trajectory is no longer shaped solely by crypto-specific events. Its direction is now intertwined with global economic policy, monetary expectations, and macro-level capital flows.

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At first glance, the picture looks bleak. But when on-chain data is read alongside derivatives markets, a more complex story emerges. Institutional announcements over the past 48 hours suggest that structural momentum may be building even as spot demand remains weak. A similar funding–price divergence last appeared in August 2024, after which Bitcoin rallied roughly 83% over the following four months.

Speaking against this backdrop, Matt Hougan, CIO of Bitwise Asset Management, says that despite the current downturn, four core themes are quietly forming beneath the surface that could fuel the next Bitcoin bull cycle.

Four Critical Trends on Hougan’s Radar

According to Hougan, markets may appear fragile, but a silent build-out is underway at the infrastructure level.

The first inflection point is so-called agentic finance—autonomous software agents capable of executing on-chain activity. Hougan points to the Agentic Wallets framework recently announced by Coinbase. The system allows agents to hold identity on-chain, manage funds, and transact without human intervention. Spending can be programmed, permissioned execution is supported, and transfers on Base can be completed gas-free.

The second theme is accelerating institutional DeFi adoption. Hougan highlights BlackRock’s plan to bring its BUIDL token to the Uniswap ecosystem. The move is expected to include UNI purchases as part of the rollout. While still early, Wall Street capital moving on-chain signals a gradual behavioral shift.

The third factor is more technical: preparation for quantum risk. With Bitcoin Improvement Proposal 360 entering the official BIP repository, the network has taken its first concrete steps toward strengthening resilience against future quantum threats. It remains early-stage, but addressing this at the protocol level already matters for long-term investors.

The fourth—and perhaps quietest—trend is tokenization. Just last week, new initiatives were announced by CME Group, Broadridge Financial Solutions, and UBS. The migration of traditional assets onto blockchain rails continues to expand steadily.

Hougan’s view is straightforward: price pressure may be temporary, but these four developments are laying the groundwork for a new wave of liquidity in the medium term.

Santiment: Short Squeeze Risk Is Rising

Another notable signal is emerging from derivatives markets. Analytics platform Santiment reports that funding rates across exchanges have dropped into deeply negative territory.

What does this mean? In perpetual futures markets, short positions have become so crowded that they are now paying longs—an indication that much of the market is positioned for further downside.

Santiment notes that funding rates last reached comparable levels in August 2024. At that time, traders increased bearish exposure. Shortly afterward, price direction reversed. Bitcoin went on to gain more than 80% over the following months.

Such imbalances tend to resolve quickly. As prices begin to rise, leveraged shorts are forced into liquidation. Exchanges close these positions, triggering cascading buy orders—a classic short squeeze scenario.

Santiment also references a liquidation event on Binance on October 10, 2025. That episode saw long positions wiped out first, followed by a sharp rise in short interest. Current funding data suggests a similar psychological imbalance across exchanges today.

El Salvador and Macro Pressure Add to the Backdrop

Macro headwinds remain significant. According to Bloomberg, Bitcoin’s latest pullback has resulted in roughly $300 million in paper losses on El Salvador’s holdings. President Nayib Bukele continues to buy Bitcoin, but the strategy is increasing the country’s credit risk.

Meanwhile, negotiations with the International Monetary Fund over a $1.4 billion loan package have grown more complex. Upcoming debt payments, delayed pension reforms, and continued crypto purchases are weighing on investor sentiment.

This, in turn, is limiting global risk appetite.

In summary: Bitcoin prices are weak, spot demand remains fragile, and short exposure dominates derivatives markets. At the same time, agentic finance, institutional DeFi, quantum security efforts, and tokenization are quietly advancing.

Bull markets often begin when headlines are pessimistic. What we’re seeing now fits that pattern—selling on the surface, preparation underneath.

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Early Wednesday morning, Bitcoin dropped to as low as $66,804. Ethereum fell below $2,000, while XRP and BNB recorded losses exceeding 4%. Markets have entered a more cautious pricing regime in recent days.

Three main reasons behind Bitcoin’s decline:

• Hawkish signals from the Federal Reserve
• Liquidation of leveraged positions
• Weak institutional capital inflows

Kevin Warsh “Shock” and Liquidity Concerns

BTC declined 3.1% over the past 24 hours, while Ethereum slid 4.1% to $1,965. XRP lost 4.3% and BNB dropped 4.5%. This move isn’t purely technical — it reflects a clear macro reassessment.

According to Bitrue Research Lead Andri Fauzan Adziima, the primary driver of the sell-off is a hawkish shift in Fed expectations following Kevin Warsh’s emergence. This implies tighter liquidity conditions and fewer rate cuts ahead.

Adziima noted that investors are currently watching the $60,000–$65,000 range as a critical support zone. If this area holds, prices could stabilize sideways. Otherwise, any recovery may require renewed macroeconomic easing.

Major Cleanup in Leveraged Trades

Kronos Research CIO Vincent Liu said derivatives data indicates a significant leverage flush. Deep position closures were observed across exchanges, while funding rates suggest most overleveraged trades have been wiped out.

Liu added that institutional capital remains on the sidelines. Large players are reluctant to re-enter aggressively until they see sustained ETF momentum or fresh macro catalysts.

While inflows into exchange-traded funds (ETFs) continue, they have yet to offset price pressure. SoSoValue data reflects this cautious backdrop. On Tuesday, spot Bitcoin ETFs recorded net inflows of $166.56 million, up from $145 million the previous day. Spot Ethereum ETFs saw more modest inflows of $13.82 million.

As risk appetite weakens, investors have shifted into a more defensive short-term stance.

Data Calendar Will Be Decisive

Despite crypto weakness, Asian markets opened higher. South Korea’s Kospi rose 1.24% by midday, while Hong Kong’s Hang Seng gained 0.42%. Japanese markets were closed for a public holiday.

In the U.S., performance was mixed. The S&P 500 declined 0.33%, Nasdaq Composite fell 0.59%, while the Dow Jones posted a modest 0.1% gain. This divergence followed weaker-than-expected retail sales data, showing consumer spending remained flat in December.

Market participants are now focused on U.S. labor market data due Thursday. These figures could reshape expectations around the future rate path and significantly influence overall risk sentiment.

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Toward the U.S. market close, BTC first dropped 4.8% to around $60,033. The selling failed to deepen. Buyers stepped in. Price quickly climbed to $65,926.

The move came just one day after Thursday’s 13% plunge, Bitcoin’s steepest daily loss since November 2022.

$700 Million in Liquidations Rocked the Market

According to CoinGlass data, roughly $700 million in leveraged crypto positions were wiped out in just the last four hours.

Of that total:

• $530 million came from long positions

• $170 million from shorts

The mix shows traders were hit hard on the way down — then caught on the wrong side again during the rebound. In other words, market direction was driven less by conviction and more by aggressive leverage.

The $60,000 level acted as a psychological floor traders had been watching for weeks. Spot buyers stepped in around that zone, igniting the bounce.

Damien Loh, Chief Investment Officer at Ericsenz Capital, said the area signals strong technical support, but warned that overall market sentiment remains fragile.

Altcoins Followed — Solana Recovered Losses Within Hours

Bitcoin’s turbulence spread across the broader crypto market.

Solana, for example, fell as much as 14% intraday, only to erase those losses within hours. The rapid reversal highlighted how quickly risk appetite can shift when liquidity tightens.

Since October’s liquidation cascades, crypto markets have already been unstable. The latest drop intensified as global markets turned risk-off. Investors dumped speculative assets — and crypto was pulled into the same current.

Strategy Reports $12.4 Billion Quarterly Loss

Bitcoin’s pullback is now showing up on corporate balance sheets.

Michael Saylor–led Strategy said Thursday it posted a $12.4 billion net loss for Q4, driven by markdowns on its Bitcoin holdings.

Price volatility is no longer hitting just traders. It’s landing directly on institutions.

Fear Index Falls to 9: “Extreme Fear” Territory

Despite the rebound, psychology remains under pressure.

The Crypto Fear & Greed Index dropped to 9, flashing “extreme fear.” The index stood at 12 a day earlier, 16 last week, and 42 last month — a sharp slide that shows how quickly investors shifted from cautious to defensive.

The index blends volatility, volume, momentum, social media activity, Bitcoin dominance, and Google Trends data. It’s designed to measure sentiment, not predict price.

Right now, the signal is clear: the market is operating in “sell first, think later” mode.

Does Extreme Fear Signal a Bottom?

In past cycles, extreme fear often aligned with local bottoms, largely because panic flushes out leveraged traders and short-term speculators.

But it’s not a rule.

The index should be read as a snapshot of stress, not a timing tool.

While Bitcoin rebounded from near $60,000 to $65,000, current data suggests the market is still being driven by leverage rather than conviction — pointing to elevated volatility in the days ahead.

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Fear and Greed Index Plummets

The Bitcoin Fear and Greed Index collects data from volatility, market momentum, BTC dominance, and social media comments to measure investor and community sentiment. The final score ranges from 0 (extreme fear) to 100 (extreme greed), with price fluctuations and momentum accounting for 50% of the result.

The index has remained below 30 since BTC’s correction began on January 22. During Saturday’s market-wide crash, where over $2.5 billion in leveraged positions were liquidated, the index dropped to 14 – the lowest level since mid-December.

If you missed Saturday’s events: BTC briefly recovered to $84,000 after Thursday’s crash but suddenly fell to $75,500, marking its lowest level since last April. This means BTC lost $20,000 since January 18, when it stood at $95,500. Altcoins followed suit, many reaching lows not seen in over a year.

Opportunity Amid the Fear?

Before declaring BTC “dead” again, the Fear and Greed Index shows investors are in extreme fear. This is where Warren Buffett’s famous advice comes to mind: “Be greedy when others are fearful, and fearful when others are greedy.” Historical data supports this approach, as similar emotional swings have often led to quick reversals.

Robert Kiyosaki also comments: the rich go on a buying spree when markets are “on sale” (during a crash), while others panic and sell. This current fear environment could, with the right strategy, present a window of opportunity for investors.

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Bitcoin Falls Below $106K, Market Sentiment Collapses

Bitcoin slipped from a daily high above $109,000 on Monday to a 24-hour low of $105,540. According to CoinGecko, BTC is now hovering just above $106,500 after briefly touching $104,497. This Bitcoin price drop has intensified fear among investors and raised concerns about further declines in the crypto market.

The Crypto Fear and Greed Index fell by nearly 50% in one day, signaling “Extreme Fear.” Analysts link the current downturn to weaker institutional demand, slowing blockchain activity and growing uncertainty over the U.S. Federal Reserve’s policy stance.

Why Investors Are in ‘Extreme Fear’

Several factors contributed to the negative sentiment:

• Over $800 million in net outflows from Bitcoin-linked ETFs last week

• Institutional buying fell below daily mining supply for the first time in seven months

• Fed cut interest rates for the second time this year but signaled no clear plan for future cuts

• Risk appetite declined amid global economic concerns and market stress

As a result, some investors rushed to exit positions, while others view this dip as a potential accumulation zone.

What Is ‘Moonvember’ and Is It Still Possible?

“Moonvember” is a term used in the crypto community to describe Bitcoin’s historical trend of strong gains in November — often exceeding 40% on average. Investors expect BTC to “go to the moon” during this month. However, with market sentiment in extreme fear and confidence fading, optimism around Moonvember is now more cautious and uncertain.

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Investors have flocked to safe-haven assets amid rising inflation concerns and uncertainty over the Federal Reserve’s independence. JPMorgan analysts have dubbed this shift the “debasement trade.”

Longtime Bitcoin critic Peter Schiff reiterated that gold remains the true store of value. Schiff said, “Bitcoin follows other risk assets… it is not a safe-haven store of value like gold. The world is moving from the dollar back to gold.”

Bitcoin: Safe Haven or Risk Asset?

BTC sharp decline coincided with rising global tensions. Trade disputes between China and the U.S., coupled with growing U.S. fiscal deficits, are rattling investors. According to JPMorgan, the macroeconomic environment remains favorable for debasement hedge strategies, with high inflation, mounting debt, and geopolitical uncertainty pressuring fiat systems.

Over the past week, Bitcoin fell 8% while gold gained nearly 6%, casting doubt on BTC’s safe-haven credentials. Users on X commented, “Debasement trade feels more like a meme now,” noting Bitcoin’s growing correlation with tech stocks rather than traditional inflation hedges.

Gold and Bitcoin: Is the Debasement Trade Still Relevant?

BTC proponents argue that gold and Bitcoin can complement each other as long-term stores of value against fiat risk. Paolo Ardoino, CEO of Tether, wrote on X, “Bitcoin and gold will outlast all other currencies.” On-chain data also shows increasing BTC-gold correlation, indicating that investors continue to hold both assets side by side in portfolios.

However, critics like Schiff warn that institutional inflows into Bitcoin ETFs could revert back to gold. He also cautioned that companies holding Bitcoin on their balance sheets might be forced to sell during downturns, adding further price pressure.

The Future of the Debasement Trade

As demand for non-fiat assets rises, investors’ time horizons and risk tolerance determine which asset they prefer. Gold benefits from centuries of trust and institutional legitimacy, while BTC offers digital portability and fixed supply but remains volatile and sentiment-driven.

• Gold: Safe haven, institutional trust, record prices

• Bitcoin: Digital portability, fixed supply, high volatility

• Debasement Trade: Long-term hedge strategy against inflation and fiat risk

This divergence between gold and Bitcoin forces investors to reconsider strategic decisions. Despite short-term volatility, the debasement trade debate remains relevant for long-term hedging strategies.

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Long-Term Bitcoin Activity Increasing 

Glassnode data reveals that the spending volume of Bitcoins held for one to five years has risen to $4.02 billion. This marks the highest level since February and represents the fifth largest spending wave of the bull market. 

Since the start of this bull market, old Bitcoin holders have sold large amounts of BTC after each rally. Investors spent significant amounts of BTC in March, October, November 2024, and February 2025. 

Spending by older $BTC holders is heating up again. Aggregate volume from the 1y–5y cohorts just hit $4.02B – the highest since February.
Older coins are on the move pic.twitter.com/jhMETQFJdB

— glassnode (@glassnode) May 28, 2025

The largest spending in this cycle occurred in October 2024, reaching $9.25 billion. Most of the sales came from investors holding BTC between one and two years. The second and third largest spending waves were in March 2024 ($6.11 billion) and February 2025 ($5.42 billion). During this period, the most active group was investors holding BTC for two to three years. The fourth largest spending was in November 2024, with $4.39 billion spent by investors holding BTC for three to five years. 

Especially, Bitcoin holders with three to five years of holding dominated this period. Their activity alone was measured at $2.16 billion, the second largest sale in the cycle. The largest sale was $6 billion in March 2024. Meanwhile, those holding BTC for two to three years spent $1.41 billion, and holders between one and two years spent $450 million. Previous major movements occurred in October, November 2024, and February 2025, where similar selling waves followed price increases. 

Old wallet holders are either taking profits or repositioning. CoinMarketCap data shows the price dropped over 4% from $111,970. At the time of writing, BTC was around $107,540, down about 3% weekly and 1.2% daily. If the aim is to change strategy, BTC may consolidate further. However, if it’s profit-taking, the price could fall below $106,000. 

***NOT INVESTMENT ADVICE ***

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What is the Santa Claus Rally?

The Santa Claus Rally refers to price increases in financial markets typically observed during the last five trading days of the year and the first two trading days of the new year. This phenomenon is attributed to year-end buying, market optimism, and low trading volumes. The crypto markets often experience similar price surges during this period.

Bitcoin’s December Performance

On December 23, Bitcoin fell to $92,442, marking its lowest level in the past four weeks. This represents a 14.5% drop from the peak of $108,000 reached on December 17. While Bitcoin briefly recovered to $95,000, it retreated to $94,036 as of December 24, losing more than 11% over the past week.

Historically, the crypto market has performed well during bull seasons and holiday periods. However, Bitcoin’s weak performance in December has reduced the likelihood of a Santa Claus Rally this year.

Cyclical Dynamics and Future Expectations

Unlike 2021, 2025 is expected to be the peak year of the current cycle. According to Bitcoin’s four-year cycle model, significant price movements typically occur during peak cycle years. As a result, stronger performances may be observed in 2024 and 2025.

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