Institutions Opened The Doors For Bitcoin, But Hot Money Cooled Off

Summary Bitcoin is rated 'Hold,' reflecting a balanced risk-return after ETF-driven growth fades and capital flows turn negative. BTC price is now primarily driven by spot ETF inflows/outflows and macro factors like the dollar and interest rate outlook. Medium-term supply constraints from halving and rising 'ancient supply' support BTC, but short-term price is flow-driven and sensitive to ETF moves. Long-term holders should maintain allocations; short-term traders should wait for sustained ETF inflows and macro improvement before adding exposure. Rapid ETF-driven Growth is Fading I would like to take a look at the price of Bitcoin ( BTC-USD ) after a longer time, as last year the price was mainly driven by financial flows into spot ETFs and headlines about interest rates. I perceive the current risk-return ratio as balanced. Record inflows in early October, when BTC shot to new highs, were followed by two consecutive waves of significant outflows. At the same time, risk-off sentiment is intensifying across markets as uncertainty about further rate cuts in December increases. The current market situation gives me an investment framework for HOLD, as it does not make much sense at the moment to sell off long-term allocations at any cost to keep all profits, but at the same time it is reasonable to wait for better entries amid continuing capital outflows or a strengthening dollar. Price chart of BTC (Seeking Alpha) ETFs Have Changed How the Market Works The crypto asset market has undergone structural changes, at least for BTC, thanks to spot ETFs. In 2024, iShares Bitcoin Trust ( IBIT ) became the world's go-to bitcoin fund on assets and liquidity, and by October 2025, it was closing in on $100 million. AUM mark. Meanwhile, regulation has also progressed, and in October 2024, the SEC approved the listing and trading of options on selected spot ETFs. That opened up familiar risk management tools for traditional investors. With easier access to bitcoin and better hedging in place, short-term moves now react much more sharply to shifts in big money flows and to changes in the macro backdrop. Dollar and Rates Tip Sentiment The number one technical driver for BTC is clearly inflows into spot ETFs. In the first week of October, BTC reached an all-time high, while $5.95 billion flowed into ETFs. Following this growth, sentiment eased, and there was an outflow of $360 million, followed by another $1.17 billion. Put simply, spot ETF flows now drive BTC. When money pours in, they vacuum up the thin new supply and push prices higher. When flows turn negative, they act as a headwind, and prices sag. The second major driver of price is the current macro environment. The dollar and real rates are reflected in demand. Any strengthening of the dollar and revaluation of the outlook for further rate cuts is immediately reflected in demand for risk assets and affects inflows/outflows into spot ETFs. Total Bitcoin Net Inflows to spot ETFs (Coinglass) And the last medium-term price driver is halving . Or rather, the new supply mechanism after halving. Since April 19, the block reward has been 3.125 BTC, or approximately 450 BTC per day. This lower supply is structurally supportive of the price, but in the short term, it will simply be outweighed by one-off outflows and inflows in the hundreds of millions of dollars. At the same time, the number of "locked" BTC is growing. BTC that has not moved for at least 10 years (ancient supply) is growing at a rate of approximately 566 BTC per day, which is currently faster than the current daily issuance of new BTC. This situation further tightens the free float but increases the short-term elasticity of the market. BTC Appears to Be Fairly Valued Today Bitcoin as a network does not generate any cash flow in the traditional accounting sense. However, from a fundamental perspective, it makes sense to monitor emissions, fees, miner behavior, and liquidity depth. After the halving, the new supply is ready and lower. When on-chain activity spikes, fees rise and miners margins improve. But when activity and price fade, fees drop, and some miners sell reserves, which can speed up and deepen pullbacks. On the demand side, spot ETFs are currently the most important factor. Strong inflows into IBIT/ GBTC / FBTC / BITB alone can correspond to several days of issuance, as we saw in October. Currently, capital flows into spot ETFs have been negative for two weeks in a row. On the supply side, the medium-term outlook remains bullish in the form of lower issuance and growing ancient supply , which tighten the available float. From the above, my fundamental conclusion today is "fairly valued," with the caveat that it would be advisable to wait for better capital flows. To look higher, I would prefer to see at least a sequential turnaround (several weeks of inflows in a row), along with a weaker dollar and lower rates . We have winter ahead of us, which is statistically a very strong period, so BTC may surprise us again. Ancient BTC Supply & Daily Issuance (BitGo) The Problem May Be Concentration I see the steady outflow of capital from spot ETFs as the biggest risk for short-term holders. Of the $1.17 billion in outflows in October, a full $932 million was directly attributable to Bitcoin products. If this pattern continues in the coming weeks, it significantly increases the likelihood of a deeper correction and testing of lower prices. The other big risk is a hawkish Fed. If markets accept that rate cuts will be slower or smaller, the dollar tends to firm up, and risk-on appetite fades fast. Regulatory shocks may be another obstacle to further upward price movement. Spot ETFs and options reduce asset discounts, but they can just as quickly bring one-off shocks (for example, in the form of stricter reporting rules, custody, or simply changes to the product list). Very often, people underestimate the factor of long-term holders. Rising ancient supply is bullish over the long run, but near term it makes BTC highly sensitive to net spot ETF flows because the tradable float keeps shrinking. With capital clustered in a few big funds, price becomes more flow-driven. Scenarios for Winter For the bullish (20%) path, we'd need net inflows to turn positive and stay that way for several weeks. In practice, these can appear anywhere in the main IBIT/GBTC/FBTC/BITB spots, ideally with increasing volume. That exact pattern powered BTC to new highs in early October. A friendlier macro, softer dollar, and easier rate outlook would only add fuel to the bull case. We are talking about a weaker dollar and a decline in interest rates. And as a final catalyst for the bulls, I would definitely mention derivatives. If the derivative structure around spot ETFs were to deepen (more tenors, more strike prices, broader market-making), this could improve opportunities for institutional investors in the form of hedging and could stabilize intraday order flow. DXY Index (TradingView) For bears (20%), this will be a surprisingly mirror-image scenario compared to bulls. Bulls will be helped by the continuation of current outflows from spot ETFs. This behavior is often accompanied by hawkish Fed policy and a strong dollar. The November episode with a strong risk-off rotation sent BTC to six-month lows . Bears would also benefit from low on-chain fees amid falling prices, which will worsen miners' cash flow and trigger sales of their reserves. And the third catalyst for bears could, of course, be regulation. Although the general perception has improved significantly, a sudden tightening (reporting, taxes, product restrictions) would quickly feed through to flows. We saw a similar reaction to the decision on spot ETF options. For the hold (60%) scenario, there are significantly fewer price catalysts. These include mixed or otherwise insignificant weekly flows with short inflows and subsequent outflows that cancel each other out. At the same time, the Fed's neutral to slightly hawkish policy persists, with no clear trend for the dollar. Gradual rate cuts in the long term will not affect sentiment in any way, as everything is already priced in. In an environment without a strong catalyst, consolidation in a wider range is very common. I expect the price to be driven by short episodes of inflows and outflows, which will reward patient investors rather than active speculators. Conclusion I am issuing a BTC HOLD rating because, after a structurally successful year with institutions backing it in the form of ETFs, I do not consider it reasonable to sell off long-term allocations just because the market has entered a phase of controlled consolidation. At the same time, however, I see no reason to chase the current price until clear signals appear in the macro and capital flows in ETFs. My baseline scenario is that BTC will oscillate in a wider range with rapid spikes during inflows and outflows. For long-term investors, this means that there is no need to make any major changes. For short-term positions, it makes sense to add exposure only when weekly flows steadily shift to ETF inflows, providing an opportunity to build a collar or short-term hedging of long-term positions.