Bitcoin Reversal World: Demand Sources Reversing, Long-term Trends Remain Unchanged

MidnightGenesis · 2026-01-21T19:21:44+00:00

The once robust flow of funds into Bitcoin from cryptocurrency ETFs and demand for DAT has reversed, leading to market complexities. Following a major liquidation, ETF inflows declined, causing a drop in DAT premiums and diminishing stablecoin supply. Bitcoin's dominance has also fallen, signaling an evolving market structure, even as institutional support remains strong. Caution is advised as cyclical adjustments may deepen.

MidnightGenesis

2026-01-21 19:21:44

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The inflow of cryptocurrency ETF funds and DAT demand, which once strongly drove Bitcoin prices, are now showing the opposite trend. According to the latest analysis by Greg Cipollaro, Head of Research at NYDIG, the market mechanisms in this reversed world are complex. Since a major liquidation event in early October, the once-growing engine has begun to stall.

Rapid Decline in ETF Fund Outflows and DAT Demand

Spot Bitcoin ETFs have functioned as the most prominent growth driver in this cycle. However, the current situation has completely changed. Cipollaro points out that the liquidation in early October reversed the inflow of funds into ETFs, leading to a sharp drop in the DAT premium. Along with this, the supply of stablecoins has also begun to decrease, creating a phase where funds are flowing out of the system overall.

The DAT and stablecoin sectors, which were once major sources of demand for Bitcoin, are experiencing liquidity withdrawals due to the narrowing of premiums and reduced supply. Market participants appear to be reassessing asset allocations and shifting toward the most mature assets.

What the Decline in Bitcoin Dominance Indicates

In market cycle adjustments, Bitcoin dominance (market share) typically tends to rise. However, currently, there is a deviation from this standard pattern.

Bitcoin dominance, which was over 60% in early November, has fallen to around 58%. The latest data shows a continued decline to 56.44%. This suggests that the market reversal in Bitcoin is underway. The situation where funds are not necessarily concentrated in the most mature assets is creating a new market landscape.

Growing Institutional Support and Cyclical Adjustments

Despite recent declines in Bitcoin prices, Cipollaro maintains a positive long-term outlook. Support from institutional investors continues to grow, solidifying Bitcoin’s role. Additionally, interest in government bonds is increasing, forming layered demand in asset allocation.

However, Cipollaro warns that the cyclical adjustment phase could deepen, and investors should prepare for the worst-case scenario. The market remains fluid, and unexpected developments are possible. There is still room for action in the DAT-related sectors, and while signs of a serious financial crisis have not yet appeared, cautious observation is necessary.

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