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Bitcoinist 2025-12-30 03:00:01

Crypto Witnesses Net Capital Flow Below $4.5 Billion For The First Time In Two Years

For the first time in nearly two years, the cryptocurrency market has experienced a turn in net capital flows, dropping below the $4.5 billion mark. This downturn comes as Bitcoin (BTC) has led a tumultuous fourth quarter, characterized by increased selling pressure and heightened volatility. Cash Flow Crisis In Crypto Notably, CoinShares recently reported that crypto products witnessed outflows totaling $446 million last week, contributing to a total of $3.2 billion in outflows since the sharp price decline on October 10th. Technical analyst Ali Martinez shared insights on social media platform X (formerly Twitter), indicating that, from a price-action perspective, a short-term bounce could be possible after such an extended downtrend, reminiscent of patterns observed following the market peak in 2021. However, when analyzing on-chain data, the overall decline in capital inflows suggests that money is currently leaving the crypto space rather than entering it. This is further supported by Bitcoin exchange-traded fund (ETF) net flows, which have seen nearly $1 billion in outflows over the past two weeks, suggesting that institutional investors are currently reducing their exposure rather than increasing their risk assets. Martinez cautioned that any potential rebound would likely be propelled by leverage rather than fresh demand, which can create scenarios where late buyers get trapped, ultimately leading to further price declines. He concluded that the risk of Bitcoin hitting lower lows remains significant as capital continues to exit the market. Could Bitcoin Recover $100,000 In Q1 2026? Despite the prevailing bearish sentiment, some optimistic forecasts have emerged for the first quarter of 2026. Crypto Rover highlighted that Q1 could be particularly bullish for both Bitcoin and altcoins for several reasons. First, fresh capital is typically deployed at the beginning of the year, as hedge funds, asset managers, and institutional players allocate new money to work. With traditional assets like gold, silver, and stock indices already nearing all-time highs, Rover believes that institutions may see crypto as an attractive opportunity, especially since Bitcoin and various altcoins still fall below their previous peaks. Second, end-of-year selling often transitions into buying come January. This behavior is frequently driven by tax-loss harvesting, where investors sell losing positions in December to lock in losses, only to re-enter those positions in January. Lastly, Bitcoin has been known to follow a four-year market cycle. The previous cycle saw Bitcoin drop from $69,000 to $32,000, before rebounding to around $48,000 and reclaiming its 50-week exponential moving average (EMA). Currently, this EMA stands near $98,200, and if Bitcoin adheres to similar patterns in Q1 2026, a move toward the $100,000 to $102,000 range is entirely plausible, marking an 18% increase from current levels. Historically, a 20% increase in Bitcoin often correlates with a 35-40% rise in Ethereum (ETH) and large-cap altcoins, while smaller altcoins may see even more dramatic increases of 60-80% before momentum stabilizes. At the time of writing, the market’s leading cryptocurrency is trading at $87,620 — a 30% drop from the all-time high of $126,000 reached in October. Featured image from DALL-E, chart from TradingView.com

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