🤔 Bitcoin, correction or end of cycle?

Bitcoin has fallen by around 25% in the last weeks, falling below its 50-week average line and encountering significantly more pessimistic sentiment on the market.

Now everyone is asking whether a bear market is imminent, or whether this is a correction that can be expected in a typical bull market?

Structural signals argue against a cycle top

Historical peaks such as the one in 2021 were characterized by extreme overvaluations. Today, the market is far from such situation. The MVRV Z-score is not in euphoric territory but at moderate levels, which is more in line with a mid-cycle profile. The RHODL ratio is also well below the typical peak levels seen at the end of a cycle.

On-chain data shows bullish fundamentals

Bitcoin continues to trade above the realized price of long-term holders—a characteristic of early bull market phases. The retest of the short-term holder base resembles a shakeout rather than a structural break. At the same time, funding rates do not indicate an overheated phase, but rather a cooling of excessive leverage positions. SOPR behavior also does not indicate extreme profit-taking or panic-driven losses.

Macro remains a potential tailwind

Global liquidity (M2) has been rising again since 2023, historically a positive driver for Bitcoin. At the same time, the US dollar index is showing a weaker environment, which tends to support risky assets. The picture is more similar to the phases of 2016 or 2020 than to the end of the cycle in 2021.

Historical parallels support this theory

In previous cycles, there were sometimes significant declines before massive periods of growth. In 2016, there were two corrections of around 40%, and in 2020, there was a crash of around 60%, each followed by strong rallies. Currently, the pattern is more consistent with a reset movement within an ongoing bull cycle. The current data points less to the end of a cycle and more to a correction in a still intact upward trend.

The decline in price has not changed the overall structural picture so far. Neither valuation indicators nor on-chain data show typical end-phase characteristics. The key factor is that large holders do not switch to distribution behavior. As long as the market structure remains above key fundamental levels, this points more to a mid-cycle correction than a trend reversal.

💪 Bitcoin crashes, but without capitulation

The sharp decline of the Bitcoin price since its all-time high in early October has pushed the value of realized losses to a level last seen during the FTX crash in 2022.

According to Glassnode, short-term investors in particular are driving the sell-off, as many positions have been closed at a loss. This is a sign of marginal demand and high uncertainty.

At the same time, BTC temporarily fell below $81,000, representing a drop of around 36% from its previous record.

However, macroeconomist Lyn Alden warns against premature panic. In her view, the current cycle lacks the classic euphoria phase, which is why a "great capitulation" is unlikely. Instead of a halving-driven four-year pattern, she sees the market as being more influenced by macro conditions and investment interest, and expects new highs in 2026 or 2027 at the earliest.

At the same time, data from CryptoQuant shows that short-term sales often mark local lows historically, provided that the price quickly returns to its cost basis.

The ETF side also reflects nervousness. However, according to Bitfinex, record outflows of more than $3.7 billion in November are considered a tactical rebalancing rather than a structural capital flight. Institutional holders remain focused on the long term, while prominent voices such as Samson Mow emphasize that there can be no real bear market without a fully-fledged bull market. Trader Peter Brandt even sees the current slump as a "healthy correction" but warns that a path toward $200,000 could take years.

Michael Saylor also contradicts doomsday narratives: volatility has fallen significantly since 2020 and Bitcoin is becoming increasingly mature, while Strategy can cope with declines of up to 90% operationally. The market is thus oscillating between panic signals, massive realized losses, and data-based counterarguments that point to a cyclical reset rather than a final collapse.

The current market phase feels less like the end of the cycle and more like a correction of overheated expectations. The decisive factor will be whether BTC regains its price basis in the short term, which will determine whether we see a bottoming out or slip into a deeper macro trend. Long-term narratives remain intact, but the market is in transition from blind expectation to data-driven reality.

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🏦 Institutions are still betting on Bitcoin

While prices fluctuate, large institutions are reorganizing their crypto exposure with clear priorities: Bitcoin as a store of value, stablecoins for payments, and structured access via ETFs and ETPs.

BlackRock describes this very openly. Robbie Mitchnick, head of digital assets, says that most clients do not "sign up" for Bitcoin as a future global payment network, but primarily view it as "digital gold". The scenario of widespread BTC use in payments is considered more of a speculative upside. This puts the store-of-value thesis at the center, while payment narratives are postponed until later.

At the same time, BlackRock affirms that stablecoins already have a clear product-market fit in the payment sector, with potential far beyond crypto trading and DeFi, for example for retail remittances, corporate and capital market settlement.

According to Cathie Wood, it is precisely this success that is leading stablecoins to take on part of the role originally attributed to Bitcoin; her Bitcoin forecast for 2030 has therefore been revised downward.

BlackRock is also expanding its product range: Following the iShares Ethereum Trust (ETHA) with inflows of around $13.1 billion, a new staked Ethereum ETF has been registered in Delaware, which aims to combine price exposure with staking yield. A corresponding regulatory change has been initiated with the SEC to enable staking in ETHA. Staked ETH ETFs would make Ethereum significantly more attractive to yield-oriented investors and follow the same logic as the previously launched Bitcoin Premium Income ETF with a covered call strategy.

There are also strong institutional signals on the demand side. Harvard University more than tripled its holdings in BlackRock's Bitcoin ETF IBIT in the third quarter, from 1.9 million to 6.8 million shares worth around $442.8 million. For a large US foundation that traditionally tends to avoid ETFs this is a remarkable step, even if the position only accounts for about 1% of the foundation's total assets. Harvard is increasing its exposure to gold (SPDR Gold Shares) as well and to large US tech stocks - a classic mix of hard currencies, tech winners and now Bitcoin exposure.

On the product side, 21Shares continues to expand its range of exchange-traded crypto instruments. Six additional ETPs were listed in Stockholm - for Aave, Cardano, Chainlink, Polkadot, and two crypto baskets. In total, 21Shares now offers 16 ETPs on Nasdaq Stockholm and manages nearly $8 billion globally, representing approximately 4% of the $191.5 billion in crypto ETFs/ETPs worldwide. A significant portion of these assets are in US products launched in collaboration with ARK Invest. At the same time, a new wave of US crypto ETFs is rolling in (most recently XRP), while traditional Bitcoin ETFs have recently seen significant outflows.

Not every development is positive for crypto treasury strategies. Index provider MSCI is currently consulting on whether companies with more than 50% crypto assets on their balance sheets - so-called digital asset treasuries - should be excluded from its indices.

A preliminary list includes 38 companies, including Strategy and several miners. Exclusion would force index-linked funds to sell and could create significant selling pressure.

The background to this is the assessment that companies whose value derives primarily from a balance sheet position rather than from operating business are more similar to investment vehicles than traditional stocks. In the short term, this poses a valuation risk, but in the long term, a clearer set of rules could lead to more predictability in treasury strategies.

On the stock side, some players are actively taking advantage of the weak phase. ARK Invest recently made massive purchases and expanded its positions in Bullish, Circle, and BitMine, while crypto stock prices were under significant pressure. At the same time, Coinbase is expanding its role as an "everything exchange" and acquiring Vector, a Solana-based DEX platform, in addition to previous deals for advertising, browsers, derivatives, and crowdfunding, a clear move to bundle CeFi and DeFi liquidity under one roof.

Overall, a differentiated picture emerges: institutions are not withdrawing across the board, but are shifting their focus away from pure price bets toward rule-based products, stable payment rails, and diversified vehicles across the entire capital structure.

The thesis of "institutional money" is less of a binary yes/no question than a question of structure. Bitcoin is visibly establishing itself as a balance sheet asset with gold-like characteristics, while stablecoins are taking over the operational payment and settlement aspect. The MSCI consultation and ETF outflows show that the markets are making a clearer distinction between business models, balance sheet bets, and structured products.

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💎 Ethereum's fundamentals remain intact

Ethereum has corrected much more sharply in recent days than many market observers expected. The price fell by 15% to $2,625, its lowest level since July, and is now 47% below its all-time high on August 24.

Within just two days, $460 million in leveraged long positions were liquidated. Demand on the derivatives market remains subdued, although the funding rate has recovered from 4% to just under 6% - still far from a bullish setup.

Macroeconomically, recession fears dominate. According to the University of Michigan, 69% of US consumers expect unemployment to rise. The US dollar index (DXY) rose to a six-month high, while companies such as Home Depot reported weak demand and historic lows in the real estate market.

Amid this risk aversion, institutional investors reduced their positions in risk assets, particularly visible in Ethereum spot ETFs: around $1.33 billion flowed out for nine consecutive days. ETH-related stocks such as BitMine Immersion and ShapeLink Gaming are also trading more than 16% below the value of their ETH holdings, a clear sign of mistrust in crypto assets on balance sheets.

Nevertheless, individual data points indicate a potential bottoming out. Top traders on OKX increased their long positions despite the decline from $3,200 to $2,700. Market participants see robust support at $2,650, but confirmation is likely to require inflows into spot ETFs and clearer signals of interest rate cuts.

Fed representative John Williams hinted at room for easing in light of the weaker labor market, supported by strong quarterly figures in the tech sector, such as Nvidia. A return towards $3,200 is therefore considered possible, but more on a weekly than a daily basis.

While Ethereum is under pressure, the most speculative segments are collapsing massively. The memecoin market lost over $5 billion in 24 hours, a 66% decline from its annual high. Total crypto market capitalization shrank by $800 billion in three weeks. NFTs fell to $2.78 billion - the lowest level since April - with declines of over 40% in the top collections.

Despite the weakness, there are structural arguments for long-term strength. Tom Lee (BitMine) sees Ethereum at the beginning of a "supercycle" that could mirror BTC's 100-fold price increase since 2017. In addition, the current ETH price is close to the average purchase price of long-term holders.

According to CryptoQuant, prices have fallen below this threshold on a sustained basis for the first time. 27 million ETH are now held in long-term wallets, compared to 10 million at the beginning of the year. If ETH falls below $2,900, this would historically be a strong accumulation area. According to Lee, volatility is more of a "discount on future growth" than a signal of structural failure.

At the same time, infrastructure is once again becoming a greater focus. Grayscale describes Chainlink as "critical connective tissue" for tokenization, cross-chain settlement, and real-world assets. With partnerships such as S&P Global and FTSE/Russell, Chainlink is positioning itself as middleware that enables off-chain data, compliance, and interoperability—an approach that has seen tokenization volume grow from $5 billion to $35.6 billion since the beginning of 2023. Pilot projects such as JPMorgan's Ondo Chain DvP settlement demonstrate this direction. The value driver is thus shifting from pure price dynamics to real infrastructure.

In addition, the recent Cloudflare outage highlights an underestimated risk: although many crypto protocols are decentralized on-chain, they remain dependent on Web2 providers for front-end, API, DNS, and storage services. Platforms such as Coinbase, Ledger, BitMEX, Arbiscan, and DeFiLlama were temporarily affected. Projects such as EthStorage, IPFS, Filecoin, and Arweave are developing decentralized alternatives—a process that, according to Ethereum co-founder Vitalik Buterin, is not optional. His "Trustless Manifesto" calls for uncompromising decentralization across all layers to eliminate single points of failure.

Ethereum is facing both cyclical pressure and structural progress. In the short term, macroeconomics, capital outflows, and risk aversion are dominating, precisely the circumstances that hit speculative segments such as memecoins and NFTs the hardest.

In the medium to long term, however, value is shifting toward infrastructure, tokenization, and real-world applications. The key question is whether Ethereum will use this phase to redirect capital flows into productive layers like staking, RWAs and interoperability. Those who only look at price targets see the stress. Those who look at the architecture see an ecosystem that is currently realigning itself.

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🧘‍♀️ Bitcoin mined at 95%, the quiet road to hard money

Bitcoin has now exceeded the 95% mark of its maximum circulation - around 19.95 million BTC have already been mined, with only 2.05 million remaining. The annual "inflation" of the Bitcoin supply is thus only around 0.8% and is approaching the range of classic "hard money" narratives.

Economists such as Thomas Perfumo from Kraken see this primarily as a sign of maturity and credibility of the offering - rather than a short-term price surge. Analysts such as Jake Kennis and Marcin Kazmierczak emphasize that this milestone underscores the functionality of the protocol: a predictable, limited money supply instead of surprises - a feature that is particularly important for government and institutional investors.

On the demand side, the market is discussing which catalyst could bring about the next structural boost. For Jeff Park (ProCap), a large nation state would be the decisive lever: if an OECD country were to actually include Bitcoin as a balance sheet reserve, he believes the price could jump to $150,000 "overnight".

Requirement: The decision would have to be real, binding, and not merely PR or misinterpretation. Samson Mow (Jan3) sees countries on the cusp of a slow to sudden regime change anyway—from observation to active allocation. At the same time, Park points to another issue that is currently acting as a brake: uncertainty surrounding quantum computing. Unclear threat scenarios could help explain why some long-term holders have recently realized profits, even though on-chain data shows that the behavior of large addresses is not historically out of the ordinary.

The US itself is already formally in the Bitcoin game. US President Donald Trump established a "Strategic Bitcoin Reserve" by executive order in March - but with clear guidelines: The reserve is to be built up in a budget-neutral manner, no new purchases on the open market are planned, and BTC that has already been confiscated may not be sold. The market initially reacted with disappointment, with the Bitcoin price falling by around 6% after the announcement. Critics such as journalist Lola Leetz also warn of "perverse incentives": If seizures become the dominant channel of inflow, there will be increased pressure to confiscate assets rather than acquire them through regular means. Matt Hougan (Bitwise), on the other hand, argues that the mere existence of a government BTC reserve massively reduces the likelihood of a ban and could motivate other countries to take similar steps.

At the same time, Representative Warren Davidson's "Bitcoin for America Act" seeks to link the strategic reserve to taxpayers' everyday lives. The bill would allow US citizens to pay their federal taxes in Bitcoin without triggering capital gains tax. The incoming BTC would flow directly into the strategic reserve. This would allow the government to accumulate Bitcoin without buying it on the market - but also without the price-supporting effect of large purchase programs. Politically, the proposal is delicate: on the one hand, it creates a standardized interface between citizens and a government BTC reserve, but on the other hand, criticism remains that the original executive order focuses primarily on confiscations, thereby exacerbating the tension between the rule of law and the "Bitcoin strategy."

El Salvador shows how slow and contradictory government Bitcoin policy can be in practice. The country recently announced another purchase of 1,090 BTC worth over $100 million, increasing its holdings from 5,968 to 7,474 BTC. At the same time, the government has promised the International Monetary Fund (IMF) to limit public BTC exposure as part of a $1.4 billion program. Official documents claim that no new Bitcoin has been purchased since the end of 2024, but reserve data indicates continuous accumulation. The IMF intends to review compliance with the commitments "at the appropriate time." In addition, according to civil society actors, Bitcoin is effectively no longer anchored as legal tender in everyday life, while educational initiatives have been scaled back. The government thus benefits financially from a growing BTC deposit without the general population or infrastructure keeping pace.

At the global level, there is growing pressure for major economies to position themselves strategically. Entrepreneur Mike Alfred believes that the US will only actively buy Bitcoin once other countries have taken the lead. He expects BTC prices to reach $1 million by 2033 and assumes that by then "almost every government" will have built up direct or indirect exposure. The question is not so much whether countries will hold Bitcoin, but when and for what reason - as a reserve, as a political symbol, or as a hedge against currency and debt risks.

At the same time, the scarcity of the remaining 5% supply and the halving-related reduction in miner rewards to 3.125 BTC per block are tightening the supply side. Less efficient miners are coming under pressure as the network shifts to fee-based financing. In an environment where around 17% of Bitcoin holdings are already held by companies and governments, the freely traded "float" continues to decline - with potentially strong effects if strategic buyers seriously enter the market.

The dream of the "nation state as a catalyst" is seductive: an OECD country, a genuine balance sheet position, and the hope of a leap into new price regions. The reality is more complex. El Salvador shows how far political narratives, international credit lines, and local reality can diverge. The US has created a framework with its strategic reserve, but at the same time is trying to reconcile budget neutrality, criticism of the rule of law, and geopolitical signaling.

The central question is therefore less whether a single event will "save" Bitcoin, but whether a quiet but broad pattern will emerge over the coming years: growing, clearly regulated reserves, increasing institutional holders - and a supply side that is becoming structurally tighter. In such a scenario, the decisive turning point could appear unspectacular in retrospect, rather than spectacular.

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🇪🇺 Europe and digital freedom

The EU has watered down the latest draft of the Chat Control Regulation and removed the mandatory client-side scanning of private messages, a setback for plans to automatically read encrypted communications.

The decisive factor was the addition that the regulation does not impose "any obligation to provide evidence" on providers, which removes the direct obligation to scan. However, key elements remain in place: voluntary mass scanning without a court order, invasive age verification, and regulations that could make anonymous communication virtually impossible.

Critics such as Patrick Breyer warn of a "return through the back door," as the infrastructure already exists and the draft can still be passed by COREPER II and the Council of Ministers without debate.

The political debate is hitting a historic front line: the fight for encryption and privacy that the Cypherpunk movement was already waging in the 1980s, a background from which central Bitcoin ideas emerged. The movement protested against government control of cryptographic technologies and coined the principle that privacy is not an exception but a fundamental right.

Bitcoin itself is partly based on the work of Adam Back, who is once again providing technical guidance today: from the cryptographer's point of view, there is no relevant quantum risk for Bitcoin in the next 20 to 40 years. Post-quantum standards have already been defined and could be implemented in time. Current quantum computers have neither the necessary logical qubits nor the stability to break cryptographic standards such as SHA-256.

However, research warns against "harvest now, decrypt later" strategies. While Bitcoin itself would not be affected, this does affect sensitive communications and long-term data security - precisely those areas that could become more centralized and vulnerable as a result of chat control structures. Experts warn that a nuclear leap in quantum research cannot be ruled out, and that institutional players should therefore invest in robust encryption at an early stage.

The conflict is thus intensifying into a fundamental question. Will Europe create an infrastructure that monitors communication and standardizes identity requirements, or one that prioritizes resilience, decentralization, and genuine end-to-end security?

With voluntary scans, age checks, and central verification mechanisms, the draft is moving toward a model of high social intervention, while the technical reality shows that central systems like Cloudflare or AWS remain single points of failure. Regulated surveillance and technological vulnerability are dangerously close to each other.

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