Bitcoin has grabbed headlines in recent days, with prices slipping below $85,000, giving back the currency’s 2025 gains. Over the last six weeks, about $1.2 trillion of value has come off the broader crypto market. Ethereum sits roughly 40% below its August highs, with Solana and many altcoins correcting even more.
On the surface, it looks like another sharp risk-off move. But if you take a step back, you’ll see it also looks like a familiar reset in a long-running secular trend.
Key Takeaways: Here are the big trends you need to watch.
- Historically, similar events have pointed to improvements for long-term investors.
- Bitcoin’s underlying network remains healthy, and historically, periods that retained its long-term cohort of holders aligned with the early stages of recovery.
- Having a deliberate, context-informed plan is critical. Gauging macro signals, monitoring ETF flows, and respecting key support areas can result in more informed decision-making.
The Catalyst for the Pullback
Rather than a single shock, this pullback reflects a cluster of forces arriving at the same time. The Federal Reserve has guided fewer rate cuts amongst a divided board, while investors are forced to operate in a cloudy outlook due to missing economic data during the government shutdown. Higher real yields naturally pull capital back toward cash and short-duration assets, so it’s not surprising that a high-growth, long-duration theme like crypto has been repriced.
At the same time, some of the biggest recent tailwinds have turned into short-term headwinds. Spot Bitcoin ETFs, symbols of institutional adoption earlier this year, saw about $903 million of net outflows in a single day, in addition to a mounting ~$3.5 billion outflows already in November. For many allocators, this has been more of a rebalance than a rejection, but the effect on price is the same when it happens quickly.
Leverage has amplified the move. On October 10, a sharp intraday drop triggered an estimated $19 billion of liquidations across perpetual futures. In those moments, selling is mechanical: positions are closed to meet margin calls, regardless of long-term conviction. Meanwhile, wallet activity linked to Mt. Gox, a former Bitcoin exchange based in Tokyo, including transfers of more than 10,000 Bitcoin, reminded investors that overhangs from earlier eras still exist and may eventually add supply.
Sentiment Shock In a Secular Story
On sentiment gauges, the result is dramatic. The Crypto Fear and Greed Index has fallen to around 11, firmly in “Extreme Fear” territory. Liquidity has thinned, and crypto-related equities such as miners, Coinbase, and MicroStrategy have sold off alongside the underlying assets. Historically, these conditions have not been the end of cycles, but the points where future returns begin to improve for investors over a longer time horizon.
Past cycles offer useful context. In 2014, Bitcoin fell about 58% from its highs. In 2018, the drawdown was closer to 74%. In 2022, the combination of tightening and industry-specific failures produced a decline of more than 60%. Today, the drawdown sits near 33% from an October peak of around $126,000. Peak-to-trough declines have also been moderating as the ecosystem has matured, suggesting more resilience even as volatility persists.
Reading the Signals Beneath the Price
Technical and on-chain signals round out the picture. Bitcoin trades well below its 50-day and 200-day moving averages – around $111,000 and $105,000 –with the Relative Strength Index drifting toward the low 30s. Traders are watching support zones near $91,000, $85,000, and a more important band around $78,000, with any sustained break opening the possibility of a move toward the $70,000–72,000 range, and, in a more severe scenario, the low $60,000s. Those levels are not certainties, but they provide a framework for thinking about risk and potential entry points.
Under the surface, however, the network remains healthy. Its hashrate sits close to all-time highs, indicating that miners still see economic value at current prices. Stablecoin balances and flows into exchanges suggest that capital has not abandoned the space, even if it has become more selective. While some long-term holders have been taking profits in recent months, the very oldest cohorts continue to hold or even grow their balances, and a large share of supply remains in hands that historically have sat through deep drawdowns. In past cycles, periods where this price-insensitive base stayed firm or expanded have often aligned with the early stages of recovery.
Attractive Entry Point: A Playbook for Turning Fear Into Opportunity
Looking ahead, the path for the next few months will likely be influenced by macro data and ETF flows. If the $78,000 region holds and outflows from spot products begin to stabilize, it’s reasonable to expect a period of consolidation and, potentially, a move back toward the $100,000 area. Even if a deeper test unfolds, the medium and long-term drivers remain in place:
- A completed halving that constrains new supply
- Growing institutional participation through regulated vehicles
- The expansion of tokenization projects
- A first-principles regulatory environment
- Wider use of stablecoins for real-world payments and settlement
For investors, the key is to translate this context into a deliberate plan. That means monitoring macro signals, watching ETF flows as a real-time gauge of institutional positioning, and respecting key support areas. It also means recognizing that periods of extreme fear, high liquidations, and sharp drawdowns have historically been when the risk-reward begins to improve for those willing to allocate patiently and size positions appropriately.
Corrections of this sort are never enjoyable while they unfold. They can, however, be constructive. They clear excess leverage, shift assets from short-term traders to long-term holders, and create entry points that do not exist in euphoric conditions. We believe Bitcoin and the broader crypto ecosystem still have years of growth ahead, and that this reset looks less like the end of a story and more like the kind of pause that has historically set the stage for the next chapter.
The content of this document is for informational purposes only and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained in this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement or public offering of securities. No securities commission or similar regulatory authority has reviewed this document, and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable; however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice.
Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. Certain statements in this document are forward-looking.
Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are, by their nature, based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments and the portfolio manager believe to be reasonable assumptions, Purpose Investments and the portfolio manager cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.