Key Takeaways
What macro indicators suggest Bitcoin could recover quickly?
The Financial Stress Index is currently below zero, indicating low market stress and potential for a near-term recovery.
How are retail and institutional investors reacting to Bitcoin’s decline?
Retail investors are buying aggressively while institutions are selling, creating a near-term bullish outlook if retail momentum continues.
Bitcoin [BTC] has remained in a bearish trend for more than a week since the decline began on October 6.
The asset fell 18% from a high of $126,000 to around $103,000 on October 10. This bearish sentiment continues to weigh on prices, signaling a possible end to the current cycle.
AMBCrypto’s research shows that macroeconomic factors remain a key determinant of whether a bear market has begun, highlighting how these factors could shape Bitcoin’s price.
Macro Factors Driving Bitcoin
Bitcoin’s correlation with US macroeconomic conditions comes from its parallel movement with the S&P 500, which has direct exposure to major economic events.
This relationship means that the S&P 500’s reaction to economic indicators often mirrors Bitcoin’s performance, a pattern that has happened several times before.
These macro factors serve as an indication of where Bitcoin could be heading and whether a bearish phase has begun.
Analyst João Wedson explains,
“Markets don’t crash out of nowhere. There are always early signals, often hidden in the data.”
An important metric to watch is the Federal Reserve’s Financial Stress Delta, which helps determine market stress levels as 2026 approaches. This indicator measures whether stress is high or low based on year-on-year data.
Source: Alpharactal
A high positive value indicates increased stress, often followed by tighter liquidity and price declines. The Delta relies on the Financial Stress Index (FSI), which provides a better picture of underlying market conditions.
Like the Delta, the FSI uses tension levels to gauge market sentiment. A value above zero indicates above-average stress, while a value below zero indicates relative calm.
Currently, the FSI is below zero, indicating that Bitcoin could maintain its upward momentum and possibly recover from recent losses.
Dollar indicators in the game
Bitcoin’s movement is also highly dependent on the performance of the US dollar, as measured by the Trade-Weighted US Dollar Index (Broad).
A higher index indicates a stronger dollar against a basket of other currencies, while a lower value reflects a weaker dollar.
A stronger dollar typically reduces market liquidity, putting pressure on Bitcoin and other assets. Conversely, a weaker dollar tends to boost liquidity and asset prices.
Source: Alpharactal
Likewise, the “Inflation vs. Expectations” chart provides another critical signal. When actual inflation exceeds expectations by a wide margin, the Federal Reserve often responds with tighter monetary policy – reducing liquidity and driving down the prices of assets, including Bitcoin.
For now, market indicators remain calm, with no clear signs of an impending downturn. This suggests a possible short-term rally for Bitcoin.
Private and institutional investors differ
Retail and institutional investors remain divided on Bitcoin’s next direction.
Recent data shows that retail traders are largely bullish. Between September 13 and 17 Octoberacquired approximately $1.66 billion worth of Bitcoin and moved it to private portfolios, with sellers failing to dominate on any day during the period.
Source: CoinGlass
In contrast, institutional investors have returned approximately $1.23 billion worth of Bitcoin to the market, according to the report SoSoValue facts.
This difference shows that retail investors are expecting a near-term recovery and have absorbed a large portion of the liquidity sold by institutions, reinforcing the optimistic near-term outlook.
However, if retail momentum wanes, Bitcoin could slide lower on the charts again.