Coinbase Institutional has issued a cautionary message to crypto investors as Bitcoin (BTC) dips below critical support thresholds, highlighting various bearish indicators such as significant ETF outflows, distribution by large holders, and declining valuations of digital asset treasuries. Currently, Bitcoin is trading notably beneath its 200-day moving average, following a steep 32% decrease from its recent peak of over $126,000, now testing support around $93,000.
The latest analysis from Coinbase outlines a troubling array of factors influencing Bitcoin’s downward trajectory. The firm emphasizes that current conditions favor breakout trades over attempts to catch price declines, recommending investors maintain a cautious stance even as the Federal Reserve ends its quantitative tightening measures and returns to bond market activities.
Despite the Fed’s re-entry potentially signaling a favorable environment for riskier assets like cryptocurrencies, Bitcoin’s recent performance has raised eyebrows. The cryptocurrency has breached important support bands that traditionally underpinned bull markets. According to Coinbase, it now trades below both the short-term holder cost basis and the 75% profit threshold, which had previously offered support during market cycles. Notably, the key $98,000 to $100,000 battleground, which previously characterized a dense base of holders, has crumbled with minimal retaliatory rebound.
Recent buyers find themselves in precarious positions, experiencing substantial unrealized losses reminiscent of those seen during the FTX debacle in November 2022. This heightened risk of capitulation among short-term holders is compounded by organic demand failing to stem the declines in the $90,000 to $85,000 range, leading to thin distribution of cost basis below current levels.
In options markets, sentiment has shifted from a cautious stance to a firmly defensive position, evidenced by the Bull-Bear Index trending negative across various time frames. Traders are now paying more for downside protection over potential upward moves, while long-dated options indicate uncertainty rather than pervasive bearishness.
Additionally, long-term holder positions have shown a marked shift to negative over the past 30 days, with market analytics firm Arkham reporting that a prominent Bitcoin whale exited an 11,000 BTC position valued at approximately $1.3 billion between late October and November.
In terms of institutional demand, recent trends reveal that spot Bitcoin ETFs, which were once significant net buyers, have experienced record outflows. As of November 2025, ETF flows turned negative as prices broke critical support levels, with U.S. spot Bitcoin ETFs currently holding around $168 billion in assets—approximately 1.36 million BTC, or 6.9% of total circulating supply.
The decline in interest for digital asset treasuries is marked as well, with market values dropping below net asset values for the first time since 2024. Several treasury vehicles are now trading at discounts to their Bitcoin holdings, creating a precarious situation where management might feel pressure to adjust asset allocation or liquidate holdings.
Companies like Strategy Inc. have begun to bolster cash reserves amid this climate, announcing a $1.44 billion reserve that aims to cover 21 months of obligations. This move coincides with updated fiscal projections that could result in either significant losses or gains depending on Bitcoin’s future prices. Compounding these issues is an approaching decision from MSCI regarding the potential exclusion of firms maintaining excessive crypto assets from global indices, a change estimated to prompt institutional sell-offs ranging between $2.8 billion and $8.8 billion.
Furthermore, the liquidity in crypto-native stablecoins is contracting, reflecting a broader deleveraging trend. Despite stablecoins reaching unprecedented circulation levels exceeding $300 billion, the recent downturn indicates a diminishing “dry powder” to fuel market rallies.
In contrast to prevailing bearish sentiments, Grayscale Research offers a differing outlook, positing that Bitcoin’s current market dynamics diverge from historical patterns due to its increasing dominance among exchange-traded products and corporate treasuries as opposed to retail exchanges. Technical indicators—ranging from heightened put option skews to on-chain signals of capitulation among traders—hint that a potential bottom formation may be on the horizon, with ongoing accumulation among large holders suggesting possible stabilization ahead.
