Bitcoin in the Doldrums: Signals, Sentiment, and the Long View
- James McKay
- 2 days ago
- 4 min read
Updated: 3 hours ago
Bitcoin has slipped into one of its weakest stretches of the year. Currently at 30% off the October highs, price has continued to drift lower with sentiment turning extremely bearish across the board. Investors who spent most of 2025 debating whether the four-year cycle was “dead” have now shifted to wondering why the market has yet again turned at the usual juncture. Yet when viewed in context, this phase looks less like the start of a deeper downturn and more like a consolidation that has simply arrived earlier than expected.
Bitcoin's lost momentum
The shift in market sentiment has come through relatively quickly. Breadth has thinned, positioning has softened, and discussions that were previously anchored in fundamentals momentum have now switched to timing market cycles. The correction itself remains limited, although it has felt heavier because multiple positioning layers have reset simultaneously rather than through a single decisive move.
Within derivatives, the same reset has been working its way through the system, with easing funding rates, declining open interest and the resultant move into backwardation (where spot trades at a premium to futures). These conditions tend to reflect hesitation rather than structural change and are usually associated with markets that are recalibrating after a strong run. The current fading momentum points to a broad reappraisal of risk which is necessary for the next directional move.
Figure 1: BTC Futures Basis (3M, Binance)The three-month futures basis briefly turned toward backwardation after the October high, signalling a shift to risk-off positioning in derivatives markets
Early bottom portends a milder drawdown
Perhaps the most striking feature of the current environment is how many bottom-aligned indicators have already fired despite the absence of a deep correction. Bitcoin is only approximately 25–30% off the highs, yet several signals sit at levels typically associated with major cyclical lows.
The weekly RSI is a good example. It is approaching the 35 level, an area that aligned with key lows in 2015, 2018, and 2022 (and the Covid bottom markets as '3*' below). In each of those cases, RSI compression occurred late in a drawdown, not early. The present market has reached similar conditions after a relatively modest decline.
Figure 2: BTC Weekly RSI (2015–2025)The weekly RSI is approaching 35, a zone that historically aligns with major cyclical lows
Realised losses tell a similar story. Short-term holder capitulation has surged to its second-highest reading on record, surpassed only by the yen carry trade unwind in August 2024 and the early tariff shocks in March and April 2025. Long-term holders have contributed to losses as well, though to a lesser degree. These types of capitulation spikes typically emerge near local turning points rather than at the beginning of a downturn.
Figure 3: Bitcoin Realized Loss by LTH/STH short-term holder realised losses have reached one of their highest levels on record, a pattern commonly seen near local market resets
It is understandable, then, why many investors feel that Bitcoin “should be lower” given the severity of these stress indicators. The reality is that this cycle remains structurally stronger than prior ones, and the market appears to be working through its corrective phase more quickly. A move into the 68–70k range remains possible, but it would not meaningfully alter the medium- to long-term outlook.
There is also a noticeable improvement in the underlying liquidity picture. The order book has begun to thicken, spreads have narrowed, and the depth on major venues has stabilised after the volatility around the October peak. While these signs rarely drive immediate price action, they matter for how quickly markets can recover once sentiment improves.
The long-term thesis remains intact
While the focus remains on price action, the structural case for Bitcoin continues to strengthen. One of the clearest examples lies in ETF behaviour. Even after outflows from several issuers in recent weeks, aggregate ETF AUM remains elevated when zooming out, again underscoring that the current outlflows are more reflexive than a sign of a meaningful reversal of demand.
Figure 4: Bitcoin ETF AUM (2024–2025) ETF AUM remains elevated despite recent outflows, indicating persistent institutional demand
Treasury behaviour tells a similar story. Over the past month, more than $500 million in Bitcoin has been added to balance sheets across corporates, funds, governments, and custodial entities. This contrasts sharply with retail behaviour, where fear has become more pronounced.
The market’s broader psychology reinforces this. Every cycle contains a familiar refrain, namely, the claim that Bitcoin is “going to zero.” Every single time Bitcoin has 'crashed' it has always recovered in the medium- to long-term to go on to set new all-time highs. This is the essence of price discovery, and there is little to no reason to believe that it will be any different this time.
Conclusion: Bitcoin's long-term trajectory remains positive
Forecasts published earlier in the year offer a useful reminder of how unreliable medium-term prediction remains. Several institutions and analysts projected year-end levels that now sit well above current prices, with targets ranging from the low $100,000s to multiples of that.
Figure 5: Most forecasts for 2025 varied widely and have so far missed the mark, reinforcing the limits of medium-term prediction.
The spread between those estimates was wide enough on its own, but the fact that none have materialised adds another layer to the recent shift in sentiment.
Despite these misses contributing to the current bearish tone, they do little to change the strengthening long-term thesis around Bitcoin. ETF holdings remain resilient, treasury allocations are growing, liquidity is stabilising, and institutional interest forms a deeper foundation each year.
Yes, the current flip to a bearish trend has shaken investor confidence, but Bitcoin has spent more than a decade cycling through fear, conviction, and renewal. en route to new ATHs. The long view remains intact.
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Disclaimer: The information contained within is for educational and informational purposes ONLY. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision. No commercial relationships or partnerships exist with any of the technology providers, manufacturers, or suppliers herein.
