Bitcoin Pullback Reflects Mid-Cycle Reset, Not ‘Crypto Winter,’ Say Analysts
Recent declines in Bitcoin are part of a routine mid-cycle correction rather than the start of a prolonged crypto downturn, according to a year-end report from Glassnode and Fasanara Digital. Strong inflows, rising realized capitalization, and falling volatility point to consolidation, not a “crypto winter.”
Bitcoin has fallen about 18% over the past three months, fueling speculation of an impending market slump. Some crypto equities, including American Bitcoin Corp., have been hit hard—ABC fell roughly 40% on Tuesday amid heavy trading, briefly impacting majority owner Hut 8. Other Trump-linked digital assets also dropped, reinforcing sector weakness narratives.
Yet market structure data tells a different story. Bitcoin has attracted over $732 billion in net new capital since the 2022 cycle low—more than all previous cycles combined. Realized capitalization reached roughly $1.1 trillion, while the spot price peaked near $126,000. Historically, realized cap contracts sharply during true winters, but that is not occurring.
Volatility trends support this outlook. BTC’s one-year realized volatility has fallen from 84% to 43%, reflecting deeper liquidity, growing ETF participation, and more cash-margined derivatives. Past winters began with rising volatility and evaporating liquidity—the opposite of current conditions. Strategies like call overwriting in BTC and IBIT options have further dampened volatility, altering traditional spot-volatility dynamics.
ETF flows and miner performance also defy winter patterns. Spot ETFs hold 1.36 million BTC (~6.9% of circulating supply) and account for 5.2% of net inflows since launch, while the CoinShares Bitcoin Mining ETF (WGMI) rose over 35% even as BTC fell. In past downturns, miners collapsed first; current strength shows recent selloffs are company-specific, not sector-wide.
Historical precedent confirms a mid-cycle reset. Similar pullbacks in 2017, 2020, and 2023 occurred during leverage reduction or macro tightening before Bitcoin resumed its upward trajectory. October 2025’s deleveraging event mirrors this pattern.
Bitcoin also remains closer to its yearly high of $124,000 than its low of $76,000. Structural indicators—record realized cap, declining volatility, and steady ETF demand—point to consolidation rather than the start of a “crypto winter.”
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