Bitcoin is currently facing significant downward pressure as its price hovers around the crucial support level of $62,000. This price point is indicative of a broader correction from the recent cycle highs and serves as a critical test for bulls who have advocated for the resilience of this price point throughout the ongoing decline. The selling pressure has been persistent, prompting analysts at XWIN Research Japan to delve into the underlying factors affecting the market.
Amid a myriad of explanations circulating in the market—ranging from geopolitical tensions and Federal Reserve policy shifts to the recent modest sale of Bitcoin by Strategy—XWIN Research Japan’s findings point to a more fundamental issue: a noticeable withdrawal of buyers from the market. The analysis suggests that the powerful rally experienced by Bitcoin from 2024 to 2025 was driven primarily by sustained inflows into US spot Bitcoin ETFs. This structural demand provided the necessary support for rising prices. However, in 2026, this demand reversed. Instead, there have been increasing outflows from ETFs, and a prolonged period of negative Coinbase Premium indicates that US institutional demand—the most robust and significant category of buyer in Bitcoin’s history—has stepped back from active accumulation.
The consequences of this demand withdrawal are stark, as represented by the Realized Capital (Realized Cap) data. The Realized Cap has seen a drop from approximately $1.12 trillion to $1.08 trillion, illustrating that nearly $40 billion of capital has exited the Bitcoin network. Such a significant reduction in actual invested capital signifies not merely a sentiment correction but genuine demand displacement.
The analysis further explores the subsequent destination of the capital that left Bitcoin, showing a shift towards US equities. Many institutions have opted for AI-related companies, which showcased strong earnings growth, active share buyback programs, and propelled the S&P 500 to record highs. In this current rate environment, these competing allocations appear more enticing than Bitcoin, thereby indicating a rotation rather than evaporation of capital from the cryptocurrency.
The futures market has also contributed to the ongoing price decline, but it has not been a causative factor. Open Interest has seen a sharp decrease, Funding Rates have normalized, and over $150 million in leveraged long positions were liquidated in the span of just two days. These liquidations have unfolded in a market already lacking the necessary spot bid to absorb the forced selling, underlining the weakened demand.
In comparison to the turmoil of 2022, the analysis provides a degree of reassurance. Long-term holders appear largely intact, and exchange balances remain historically low. This current correction, characterized by insufficient buying rather than overwhelming selling, does not mirror the panic-driven supply excess that marked the market’s previous collapse.
XWIN Research Japan identifies specific conditions that would signal a potential recovery: a return of positive ETF flows, a resurgence of the Coinbase Premium above zero, growth in Realized Cap, and a deceleration in capital concentration within AI stocks. These indicators would confirm that demand is making a comeback rather than continuing to retreat further away.
As Bitcoin attempts to stabilize at its current level of $62,500, it finds itself back within the critical demand zone that previously marked a capitulation low in February. Having lost the $72,000-$74,000 support zone, which had acted as a major pivot in the preceding months, market analysts note that the structure has deteriorated notably. The increasing volume during the recent breakdown suggests aggressive selling rather than transient liquidity issues.
Currently, the market is testing the February bottom region, which represents the historical significance of this support area. A successful defense of this zone could allow Bitcoin to form a base; however, if this support fails decisively, the next target may shift toward the psychological threshold of $60,000, followed by a potential decline into the high-$50,000 range.
