Selling pressure overwhelms new capital inflows; institutional unwinding and the absence of buying interest define the current cycle.

CryptoQuant CEO Ki Young Ju has declared the current bitcoin market a definitive bear cycle, warning that a genuine recovery could take months and may require prices to fall further before a sustainable rebound materializes.

Sponsored

Sponsored

Capital Inflows Failing to Move the Needle

In an interview with a South Korean crypto outlet, Ju laid out a data-driven case for extended weakness. He pointed to a fundamental imbalance between capital inflows and selling pressure.

“Hundreds of billions of dollars have entered the market, yet the overall market capitalization has either stagnated or declined,” Ju said. “That means selling pressure is overwhelming new capital.”

He noted that past deep corrections have typically required at least three months of consolidation before investment sentiment recovered. Ju emphasized that any short-term bounces should not be mistaken for the start of a new bull cycle.

Two Paths to Recovery

Ju outlined two scenarios for Bitcoin’s eventual recovery. The first involves prices dropping toward the realized price of approximately $55,000. The price is the average cost basis of all bitcoin holders, calculated from on-chain transaction data, before rebounding. Historically, bitcoin has needed to revisit this level to generate fresh upward momentum.

The second scenario envisions a prolonged sideways consolidation in the $60,000 to $70,000 range. The prices would grind through months of range-bound trading before the next leg up.

Sponsored

Sponsored

In either case, Ki stressed that the preconditions for a sustained rally are not currently in place. ETF inflows have stalled, over-the-counter demand has dried up, and both realized and standard market capitalizations are either flat or declining.

Institutional Exodus Behind the Decline

Ju attributed much of the recent selling to institutional players unwinding positions. As bitcoin’s volatility contracted over the past year, institutions that had entered the market to capture volatility through beta-delta-neutral strategies found better opportunities in assets such as the Nasdaq and gold.

“When bitcoin stopped moving, there was no reason for institutions to keep those positions,” Ju explained. Data from the CME show that institutions have significantly reduced their short positions—not a bullish signal, but evidence of capital withdrawal.

Ju also flagged aggressive selling patterns where large volumes of bitcoin were dumped at market price within very short timeframes. He believes this suggests either forced liquidations or deliberate institutional selling to manipulate derivative positions.

Altcoin Outlook Even Bleaker

The picture for altcoins is grimmer still. Ju noted that while altcoin trading volume appeared robust throughout 2024, actual fresh capital inflows were limited to a handful of tokens with ETF listing prospects. The broader altcoin market cap never significantly surpassed its previous all-time high, indicating that funds were merely rotating among existing participants rather than expanding the market.

“The era of a single narrative lifting the entire altcoin market is over,” Ki said. He acknowledged that structural innovations such as AI agent economies could eventually create new value-driven models for altcoins, but dismissed the likelihood of simple narrative-driven rallies returning.

“Short-term altcoin upside is limited. The damage to investor sentiment from this downturn will take considerable time to heal,” he concluded.

TLDR

• The Permissioned DEX amendment on the XRP Ledger will activate in 24 hours.
• This upgrade introduces controlled environments for trading within the decentralized exchange.
• The amendment allows regulated financial institutions to participate while adhering to compliance requirements.
• XRP’s demand remains strong, with nearly $4.5 million flowing into XRP-focused products in the last 24 hours.
• The Permissioned DEX amendment builds on the previous XLS-80, enhancing the platform’s functionality for permissioned domains.

The Permissioned DEX amendment is set to go live on the XRP Ledger within 24 hours, marking a key milestone for the platform. This upgrade will introduce controlled environments for trading within the XRP Ledger’s decentralized exchange (DEX). The development is expected to facilitate broader participation, especially from regulated financial institutions.

XRP Ledger’s Permissioned DEX Amendment Activation

The Permissioned DEX amendment, also known as XLS 81, is set to activate on the XRP Ledger tomorrow. This amendment will create controlled trading environments, allowing only authorized users to place and accept offers. By integrating permissioning directly into the DEX protocol, it is designed to offer a secure space for regulated entities to trade.

According to XRPScan, the countdown to activation stands at just 23 hours. This feature builds upon the previous XLS-80, which focuses on Permissioned Domains. As part of this upgrade, users within these domains will have the ability to trade freely but only within a pre-approved group.

XRP’s Continued Demand Despite Market Shifts

XRP remains in strong demand, even as the broader cryptocurrency market experiences fluctuations. Rayhaneh Sharif Askary, the head of product and research at Grayscale, spoke about the consistent interest in XRP at a recent community event. “Advisors are constantly asked by their clients about XRP,” said Sharif Askary, underlining its continued relevance.

In fact, XRP has become one of the most talked-about assets, trailing only behind Bitcoin in some circles. This increasing interest is reflected in the recent data compiled by SoSoValue, showing XRP funds receiving nearly $4.5 million in the last 24 hours. Despite a market drop, the demand for XRP shows no signs of slowing down.

At the time of writing, XRP had fallen by 1.78% in the last 24 hours to $1.45. However, it had gained 3.59% over the past week. This indicates that, while it may face short-term volatility, XRP continues to attract attention from investors.

The introduction of the Permissioned DEX amendment is seen as a crucial step in XRP’s journey toward broader institutional adoption. By offering a controlled environment for trading, the XRP Ledger aims to cater to the needs of regulated financial institutions.

The integration of permissioning features within the DEX protocol allows these institutions to participate without violating compliance requirements. In the long term, this move could play a pivotal role in attracting more institutional investors to the XRP ecosystem.

Exchange-traded fund issuers Bitwise and GraniteShares have filed with the US Securities and Exchange Commission to launch funds tied to event contracts on the outcome of US elections.

Bitwise filed a prospectus on Tuesday for a new lineup of ETFs branded as PredictionShares, with six prediction market-style ETFs on NYSE Arca.

The first two funds will pay out if either a Democrat or a Republican wins the U.S. presidential election in November 2028. The next two will pay out if either Democrats or Republicans win the Senate in November 2026, and the final two if either party wins the House.

“The fund’s investment objective is to provide capital appreciation to investors in the event that a member of the Democratic Party is the winner of the US Presidential election taking place on November 7, 2028,” read the prospectus.

Each fund invests at least 80% of its net assets in binary event contracts, or political prediction market derivatives traded on CFTC-regulated exchanges. These contracts settle at $1 if the referenced outcome occurs and $0 if it doesn’t. 

“In the event that a member of the Democratic Party is not the winner of the 2028 Presidential election, the fund will lose substantially all of its value,” it explained. 

Betting on a prediction market wrapped in an ETF 

In essence, Bitwise is offering separate ETFs for each race — one for each party — and investors can choose which one to buy into. 

The price of each fund’s shares on any given day reflects the market’s implied probability of that outcome, fluctuating between $0 and $1 based on polling, news, and sentiment.

Related: Prediction markets are the new open-source spycraft

ETF issuer GraniteShares also filed a prospectus on Tuesday offering six similar funds with the same structures based on US election outcomes. 

“The financialization and ETF-ization of everything continues,” commented Bloomberg ETF analyst James Seyffart.

Not the first prediction market-style ETF filings

“This is not the first filing of this kind, and I think it’s extremely unlikely that these will be the last,” added Seyffart, in reference to the Roundhill filing for similar funds on Feb. 14.

The Roundhill prospectus also offers six prediction market-style ETFs based on the outcomes of the presidential, Senate, and House elections. 

Magazine: Chinese New Year boosts interest, TradFi buying crypto exchanges: Asia Express