"The structurally weak bias remains unchanged, but the trend change in the U.S. dollar is becoming a key variable."
After the latest round of pullbacks, Bitcoin's price structure has further weakened. The most intuitive signal is that it continues to trade below the 21-week moving average, aligning with the technical characteristics of a bear market. At the same time, policy uncertainties during the U.S. midterm election year, combined with the typical阶段性 overlap of Bitcoin's four-year cycle, have historically made this time window more prone to price pressure. However, against the backdrop of a weakening dollar and the ongoing reflation narrative, we maintain a relatively positive outlook on overall risk assets, but our view on Bitcoin still requires cautious evaluation in conjunction with structural signals.
Price Structure Under Pressure: Selling Pressure Not from Institutions, but from Dispersed Speculative Losses
Over the past six months, Bitcoin has failed to strengthen in sync with gold and other risk assets. Since June 2025, sustained selling by early holders was once seen as the main suppressing factor. However, since October, as gold accelerated its upward move and Bitcoin turned to correction, it has become clear that a single factor can no longer explain the current divergence.
The flash crash on October 10, 2025, became a significant watershed. This event led to a notable widening in cross-asset relative pricing and inter-exchange spreads, squeezing the risk budgets of market makers and market-neutral funds, thereby weakening short-term liquidity. It is worth noting that there are almost no signs of concentrated losses among major trading institutions. Instead, realized losses are more分散ly occurring among a broader range of market participants. Data shows that traders on the Hyperliquid platform contributed over 50% of the realized losses, indicating that the recent shock was primarily borne by speculative retail investors rather than being institution-led.
Changes in Capital and Narrative: Weakening Dollar is a Supporting Variable, but Risk Appetite is Still Cooling
On a macro level, the reflation narrative persists, and the dollar remains in a weak trading range. Historically, Bitcoin has often found medium-term support during phases of sustained dollar weakness. Recently, Trump has neither sent a clear signal of support for a weaker dollar nor made strong statements against it. The market tends to interpret this as increased tolerance for a weaker dollar, suggesting that the reflation trade may still find support in the short term.
However, from a capital perspective, risk appetite has shown marginal signs of turning cautious. The one-year rolling growth rates of the stablecoin supplies of both USDT and USDC peaked around October 2025 and have since slowed significantly, with USDC seeing a more pronounced decline. Meanwhile, Bitcoin's overall search热度, which peaked in 2021, has remained low for a long time, reflecting more a cooling of retail attention rather than a wave of panic. Although discussions related to quantum computing have cooled down, they still, to some extent, suppress Bitcoin's "safe asset" narrative, making it difficult for its safety premium to recover.
Overall, although the dollar's 14-year-long uptrend has been broken—a change that has historically tended to help Bitcoin establish medium-to-long-term support—the current price structure remains weak, with rebounds often being sold into, and the overall trend remains within a consolidation range under a bear market framework. Our view on Bitcoin has marginally turned more constructive compared to before, but before shifting to a clearer bullish stance, we still need to wait for further improvement and confirmation from technical and capital flow signals.
Some of the above views are from Matrix on Target. Contact us to obtain the full Matrix on Target report.
Disclaimer: The market is risky, and investment requires caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
