Bitcoin has gone through one of its most challenging phases yet. Since its market capitalization peaked at an all-time high of $2.486 trillion, the asset has lost about $716 billion.
According to CoinMarketCap, Bitcoin’s market cap at the time of writing was $1.77 trillion.
A decline of 28.8% on this scale does not occur in isolation.
With Bitcoin [BTC] While the stock was trading around $88,900 at the time of writing, several factors contributed to the decline. AMBCrypto examined the forces weighing on Bitcoin’s performance and what could shape its next move.
Capital inflows weaken after 2.5 years
Bitcoin’s recent price weakness is largely due to capital leaving the market. While this may seem simple, on-chain data has shown a more nuanced shift.
For the first time in more than two years and six months, capital inflows are starting to weaken, as realized capitalization has come to a standstill during this period.
The Profit and Loss (PnL) Index Signal identified this trend by combining several metrics based on the 365-day moving average to determine whether the market is undervalued or overvalued.
Source: CryptoQuant
In this context, realized capitalization has been flat for almost a month, reflecting a lull in the arrival of new capital into the market as investors gradually withdraw.
Ki Young Ju, founder of CryptoQuant, noted that periods like this often take time to stabilize as recovery relies on the return of new capital.
“The recovery of sentiment could take several months,” he said.
Now that more than $700 billion has left the market and limited inflows are taking its place, Bitcoin’s overall price structure remains vulnerable. Under normal circumstances, this setup would increase the chance of price stagnation or further downturn.
Does this spell disaster?
Despite the liquidity slowdown sending a bearish signal, the price action has not broken off sharply.
Spot market data from the past three months showed buyer activity outweighing selling pressure. The Bitcoin Spot Taker Buy-Sell Cumulative Volume Delta indicated that investors are in an accumulation phase, indicating that retail participants are still active in the market.
Source: CryptoQuant
This behavior offers a possible explanation for Bitcoin’s ability to maintain its reach despite weaker capital inflows.
The Spot market reinforces this trend.
Since December, investors have continued to accumulate Bitcoin. Between the week ending December 1st and the week ending the 15th, total Spot purchases reached approximately $3.12 billion.
When selling pressure is absorbed despite dominant bearish sentiment, it limits the extent to which prices fall.
Bitcoin remains structurally limited
Market analyst David attributed Bitcoin’s price behavior largely to options traders hedging their positions, rather than shifts in sentiment.
The analysis found that call and put options, clustered around $90,000 and $85,000, have effectively trapped Bitcoin within a narrow trading range. These positions create a positive gamma environment that mechanically limits price movements.
In practical terms, as Bitcoin approaches the $90,000 level, market makers will face a sell-off wall of around $40.7 million.
Conversely, when the price drops towards $85,000, buy orders totaling about $80 million appear. This dynamic creates a gamma effect that causes the price to fluctuate within defined limits.
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This confirmed that Bitcoin’s recent bandwidth move is driven by market structure and not investor sentiment.
An estimated $278 million – representing 54% of the total market range – will expire on December 26, equivalent to the expiration of $23 billion in options contracts.
Once this range expires, Bitcoin will likely return to sentiment-driven prices. If bullish pressure remains dominant, as reflected in spot market volume trends, conditions could support a potential recovery when real price discovery resumes.