Bitcoin downturn or false rally? Insights from your quantitative analysts.

Bitcoin’s persistent value above $100,000 was anticipated to indicate its emergence as a mature institutional asset. However, its abrupt decline below this level has caused unease among traders and rekindled concerns about a potential crypto winter.

On November 4, Bitcoin momentarily fell to its lowest point since May at $99,075, before bouncing back to around $102,437 at the time of reporting. Despite this recovery, BTC remains approximately 3% lower than the day’s high of $104,777, based on data from CryptoSlate.

This price movement has led to Bitcoin underperforming compared to US Treasuries for the first time this year, negating one of the most favored macro trades of 2025.

Bitcoin vs US Treasuries Performance (Source: Joe Weisenthal)

Nevertheless, analysts assert that this shift signifies a structural adjustment rather than a systemic failure.

What is causing the decline in Bitcoin’s price?

Long-term holders have significantly contributed to the downward trend of the leading digital asset by realizing profits at unprecedented rates.

Bitcoin analyst James Van Straten observed that this group has sold over 362,000 BTC, averaging about 3,100 BTC daily, since July. He noted that this selling pace has accelerated in the last three weeks to nearly 9,000 BTC each day.

Another analyst, Johan Bergman, proposed that the total could be even greater. He estimated that the cumulative realized profits for the long-term holder group rose from $600 billion in June to $754 billion currently.

He stated:

“Assuming they sold at an average price of $110,000, that’s about $72,000 in profit per coin. So, $154B / $72K ≈ 2.1 million coins sold.”

Data from James Check at CheckOnChain further indicates that Bitcoin is currently experiencing $34 billion in monthly sell-side pressure as older coins return to exchanges.

This influx has largely counterbalanced the declining demand from ETFs and corporate treasuries, some of which have redirected their focus to share buybacks instead of new crypto investments.

Bitcoin Capital Flows (Source: CheckOnChain)

Simultaneously, speculative activity is also diminishing in the market.

Data from Glassnode reveals that the funding rates for perpetual futures have dropped by 62% since August, from around $338 million to $127 million per month, indicating reduced leverage.

Bitcoin Perpetual Funding Rate (Source: Glassnode)

The firm remarked:

“This highlights a clear macro downtrend in speculative interest, as traders become hesitant to incur costs to maintain long positions.”

Meanwhile, the waning enthusiasm coincides with tightening global liquidity.

The extended US government shutdown, which is tied for the longest on record, has effectively immobilized around $150 billion in the Treasury General Account, reducing liquidity that typically flows through risk assets.

BitMEX cofounder Arthur Hayes pointed out that since the debt ceiling increase in July, dollar liquidity has decreased by roughly 8%, while Bitcoin has fallen by 5%, reinforcing the correlation between the two.

$95K as the market’s stress point

In light of this wave of selling, Check estimates that 57% of all dollars invested in Bitcoin are currently at a loss. His cost-basis model, which values each coin based on its last on-chain transaction, reflects what he describes as the market’s recency bias.

He wrote:

“We price every coin when it last transacted onchain, and this helps us interpret sentiment based on our recency bias. We don’t think about our coins from prior cycles as much as the ones we bought 3 days ago.”

In this context, he highlighted that approximately 63% of capital invested has a cost basis above $95,000, establishing that level as a crucial psychological and structural support.

Bitcoin Invested Value by Cohort. (Source: CheckOnChain)

He also noted that unrealized losses amount to nearly $20 billion, or about 3% of market capitalization. Historically, bear markets have commenced once unrealized losses surpass 10%.

Consequently, if prices fall below $95,000, he foresees a decline in sentiment. Previous corrections in 2024 and early 2025 stabilized when losses reached 7–8% of market cap. A deeper drop could indicate the onset of a new bear phase.

Check remarked:

“Obviously nobody wants to make that call AFTER the price has already fallen, which is why $95k is a critical line in the sand to hold, as it deteriorates below.”

Is this the beginning of a bear market?

Industry analysts are split on whether Bitcoin’s recent decline signifies the start of a new downtrend or merely a mid-cycle adjustment.

Check stated:

“There has been a tremendous rotation of coins in 2025, and a large portion of it has occurred above $95k. We don’t want to see the price fall below $95k, but I also expect the bulls to put up a strong defense to maintain it. Prepare for a bear but don’t believe the doomers.”

Conversely, in a recent note titled “Hallelujah,” Hayes characterizes the downturn as a result of temporary dollar scarcity rather than a structural breakdown.

He explained that the substantial issuance of Treasury securities has drained liquidity from the money markets. However, he anticipates this situation will reverse once policymakers reopen the government and resume balance-sheet expansion.

He wrote:

“If the current money market conditions persist, the treasury debt pile grows exponentially, the SRF balance must grow as the lender of last resort. As SRF balances grow, the amount of fiat dollars in the world expands as well. This phenomenon will reignite the Bitcoin bull market.”

Meanwhile, Matt Hougan, chief investment officer at Bitwise Asset Management, shares Hayes’s long-term optimism but contextualizes it within Bitcoin’s evolving maturity.

On CNBC, he described the recent decline as “a tale of two markets,” where retail traders capitulate amid leverage washouts while institutions quietly increase their exposure.

In light of this, Hougan emphasized that BTC’s risk-adjusted outlook remains unparalleled, but the era of 100x yearly returns has passed. He added:

“We’re unlikely to see 100x returns in a single year. But there is still massive upside once the distribution phase is complete…[However, we still] believe bitcoin will reach $1.3 million by 2035, and I personally think we’re being conservative.”

At the same time, he believes BTC’s phase of 1% allocation is over as its reduced volatility makes it more appealing to hold.

Hougan concluded:

“As an allocator, my response to this dynamic would not be to sell the asset—after all, we forecast bitcoin to be the best-performing large asset in the world over the next decade—but rather, to buy more of it. Put differently, lower volatility means it’s safer to own more of something.”

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