NYDIG: Bitcoin's Demand Engine Reverses, But Long-Term Trend Unchanged

On November 24th, according to a report by Cointelegraph, Greg Cipolaro, the Head of Research at NYDIG, stated in his latest report that the inflow of cryptocurrency ETF funds and Demand and Time Deposits (DAT) had previously pushed Bitcoin to a new all-time high but was now causing its price to decline. He pointed out that a liquidity event in early October led to a reversal in ETF fund flows, a significant drop in the DAT premium, and a decrease in the supply of stablecoins, indicating that funds were flowing out of the system. The spot Bitcoin ETF was once the most prominent success story of this cycle but had now become a hindrance to Bitcoin's development. However, factors such as global liquidity and macro news continued to have an impact on Bitcoin. During cyclical pullbacks, Bitcoin's dominance tended to rise as funds flowed back into the most mature asset. Currently, Bitcoin's dominance had fallen from over 60% in early November to around 58%. DAT and stablecoins had once been important sources of Bitcoin demand. However, as the DAT premium compressed and the supply of stablecoins declined, investors seemed to be withdrawing liquidity. Cipolaro believed that even as the market downturn deepened, the DAT sector still had cushioning room and there were currently no signs of financial distress. Despite the recent pullback, Cipolaro remained bullish on Bitcoin's long-term outlook, believing that it was gaining institutional favor, sovereign interest was growing, and its role was becoming more established. However, he warned that the cyclical narrative was becoming evident and investors should be prepared for the worst as the road ahead might be bumpy.