The forces that pushed Bitcoin to its October peak are now dragging it back toward multi-month lows, according to a new analysis from NYDIG.
Key Takeaways:
- Bitcoin’s recent rally has reversed, with NYDIG calling the shift “actual capital flight.”
- October’s liquidation event broke the inflow loop, turning spot ETFs into a headwind and compressing DAT premiums and stablecoin supply.
- Despite outflows, Bitcoin dominance is rising as traders rotate out of risk assets.
Head of research Greg Cipolaro said the same reflexive loop that powered Bitcoin’s run, ETF inflows, digital asset treasury (DAT) demand and rising stablecoin liquidity, has now flipped into reverse, signaling what he calls “actual capital flight,” not just sour sentiment.
ETF Inflows Flip Negative After October Shakeout, Says NYDIG
In a Friday note, Cipolaro explained that Bitcoin’s last major leg higher was closely tied to strong inflows into spot ETFs and aggressive treasury accumulation.
However, a sharp liquidation event in early October broke that loop. ETF inflows turned negative, DAT premiums collapsed and stablecoin supply slipped for the first time in months.
These are, he said, the classic markers of liquidity leaving the system.
“Once that loop breaks, the market tends to follow a predictable sequence,” Cipolaro wrote.
“Liquidity tightens, leverage tries to rebuild but fails to gain traction, and narratives that previously drove inflows stop working. The story changes, but the mechanics don’t.”
Spot Bitcoin ETFs, the market’s biggest success story of 2024–2025, have now become a headwind, reversing from a consistent inflow engine into sizable net outflows.
Cipolaro emphasized that broader factors like global liquidity shifts, macro uncertainties and structural market stress are all helping shape the current drawdown.
Despite the selloff, Bitcoin dominance is rising, a familiar pattern during market downturns. As riskier assets unwind, capital often retreats into Bitcoin as the most liquid and established asset.
Dominance briefly pushed above 60% in early November before settling around 58%, per CoinMarketCap.
DATs and stablecoins were a major structural demand base for Bitcoin earlier in the cycle. Now, DAT premiums have compressed across the sector and stablecoin supply has dipped, signaling that investors are pulling liquidity out of crypto broadly. Still, Cipolaro said the DAT space remains stable, with no visible signs of financial stress.
“Leverage remains modest, interest obligations are manageable, and many DAT structures allow issuers to suspend dividend or coupon payments if needed,” he said.
Long-Term Bitcoin Thesis Unshaken
Even as near-term risk builds, Cipolaro argued that Bitcoin’s long-term trajectory, driven by institutional adoption, sovereign interest and its role as neutral programmable money, remains unchanged.
“Nothing in the past few weeks changes that long-horizon trajectory,” he wrote.
“But the cycle story — driven by flows, leverage and reflexive behavior — is now asserting itself more forcefully. Investors should hope for the best, but prepare for the worst.”
He warned that if past cycles are any indication, the path ahead may be uneven and emotionally taxing, marked by sudden dislocations as liquidity reshuffles once again.
As reported, the New York Stock Exchange has approved the listing of Grayscale’s XRP and Dogecoin exchange-traded funds, clearing both products to begin trading on Monday.
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