Glassnode: An 18% Drop in Bitcoin Does Not Indicate a Crypto Winter; Institutional Funds and ETFs Support the Market

In the past three months, Bitcoin has dropped by about 18%, sparking market concerns about a potential crypto “winter.” On Tuesday, shares of a US Bitcoin company plummeted around 40%, causing panic among some investors. However, a new report from Glassnode and Fasanara Digital indicates that market structure indicators suggest this downturn is more of a cyclical adjustment rather than a full-blown decline.

The report points out that since the cycle low in 2022, Bitcoin has attracted over $732 billion in new capital, with a realized market cap of around $1.1 trillion, and the spot price has risen from $16,000 to about $126,000. Realized market cap is typically the first indicator to contract during a winter, but so far, there has been no significant shrinkage. Meanwhile, one-year realized volatility has dropped from 84% to about 43%, indicating enhanced liquidity, active ETF and cash-margined derivatives trading, and suppressed price fluctuations.

ETF activity also deviates from the traditional winter pattern. Currently, spot ETFs hold about 1.36 million Bitcoins, accounting for 6.9% of the circulating supply, with about 5.2% net inflow since launch. In historical winters, ETF fund flows are usually negative and remain so for a long period, whereas the current situation is the opposite. The miner sector is also performing strongly, with the CoinShares Bitcoin Mining ETF rising over 35% during the downturn, indicating that problems with individual companies do not represent industry-wide weakness.

The report emphasizes that this pullback is more like a normal mid-cycle adjustment in historical cycles, similar to those in 2017, 2020, and 2023, which typically occur during periods of deleveraging or macro tightening and are accompanied by short-term deleveraging events. Bitcoin’s current price is much closer to this year’s high of $124,000 than its low of $76,000, indicating the market has not entered a typical winter range.

Glassnode concludes that record-high realized volume caps, declining volatility, and sustained ETF demand suggest the market is in a phase of consolidation and stability, rather than showing early signs of a winter. Institutional capital and ETF support have reinforced Bitcoin’s long-term resilience. (CoinDesk)