TL;DR
- Investor confidence in crypto has taken a sharp downturn as ETF inflows have turned negative and digital asset trusts (DATs) unwind exposure to Bitcoin and Ethereum, adding pressure to prices.
- Retail traders show exhaustion as the market underperforms equities.
- Analysts note that a strong Bitcoin rally could quickly shift sentiment, suggesting that even a single breakout may spark renewed buying interest.
The crypto market has entered a period of subdued activity, with ETF inflows turning negative and digital asset trusts gradually reducing exposure to $BTC and $ETH. Analysts point out that while the largest DATs remain relatively stable, smaller trusts are taking protective measures for their net asset values, creating subtle downward pressure across the market.
October 10th remains a notable turning point, marking a broad liquidation event that continues to influence sentiment. Market makers are still unwinding positions, while retail investors, challenged by stagnant prices and prolonged underperformance compared to equities, are showing signs of capitulation. Additional liquidity concerns have surfaced as smaller exchanges and custodial platforms adjust risk parameters, further affecting investor confidence and trading behavior.
Miles Deutscher, market strategist, explained that these structural and psychological factors explain much of the current weakness.
“The combination of dried-up ETF demand, ongoing DAT unwinds, and lingering effects from October 10th has created a flat market,”
he said, noting that even small fluctuations are magnified in an environment of low conviction. Market depth has thinned considerably, and volatility remains suppressed, amplifying the sense of stagnation across major crypto pairs.
Altcoin Lethargy Persists As Analysts Encourage Research Focus
Beyond Bitcoin and Ethereum, altcoins have struggled to gain traction, with only a small fraction outperforming BTC this year. Analysts recommend using this slower market period to focus on research rather than short-term trades.
Daan Crypto Trades noted that altcoin outperformance has been sporadic, rarely lasting more than a few months, and that patient, research-driven strategies are likely to yield the best results in the current environment. With investor attention diverted, early movers who carefully track projects and communities may gain a strategic edge as the market eventually shifts.
Despite ongoing weakness, analysts remain cautiously optimistic. A single $BTC rally could reignite sentiment across the market, proving that even after months of underperformance, crypto’s potential for rapid turnarounds remains intact. The challenge for investors is to identify early-stage opportunities during this calm, which could lead to outsized gains when the market eventually regains momentum.
