Bitcoin has corrected after its Fed FOMC-induced rally, exhibiting a "buy the rumor, sell the fact" pattern. While the current ~12% decline from its all-time high remains relatively mild, market structure signals weakening momentum.

• Unprecedented Capital Rotation Scale: This cycle has seen a realized cap increase of $678 billion—nearly 1.8 times the previous cycle—with long-term holders realizing profits on 3.4 million BTC, exceeding past cycles in scale.

• ETF Demand-Selling Pressure Imbalance: Post-FOMC, ETF net inflows plummeted to near zero, while long-term holder selling pressure rose to 122,000 BTC per month, creating a fragile supply-demand balance.

• Derivatives Market Volatility Intensifies: Futures markets deleveraged, open interest declined, and liquidation clusters indicate concentrated leveraged long positions between $114,000 and $112,000, leaving the market vulnerable to liquidity-driven swings.

• Options Market Turns Defensive: Implied volatility spiked due to liquidations, put demand surged, and market maker positioning amplifies downside risks, reflecting growing concerns over a deeper correction.

• The short-term holder cost basis at $111,000 serves as critical support; a break below could trigger a more significant market cooldown.

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Authored by: Chris Beamish, Antoine Colpaert, CryptoVizArt, Glassnode
Compiled by: AididiaoJP, Foresight News

Bitcoin shows signs of weakness following its FOMC-driven rally. Long-term holders have realized profits on 3.4 million BTC, while ETF inflows have slowed. With spot and futures markets under pressure, the short-term holder cost basis at $111,000 is a key support level—a breach may lead to deeper cooling risks.

Summary
After the FOMC-driven surge, Bitcoin has entered a correction phase, reflecting a "buy the rumor, sell the fact" dynamic. Broader market structure points to fading momentum.

While the 8%–12% decline remains moderate so far, the $678 billion realized cap inflow and 3.4 million BTC in profits realized by long-term holders highlight the unprecedented scale of capital rotation and selling this cycle.

ETF inflows dropped sharply around the FOMC meeting, while long-term holder selling accelerated, creating a fragile balance in capital flows.

Spot trading volume surged during the sell-off, and futures markets experienced sharp deleveraging. Liquidation clusters reveal vulnerability to liquidity-driven volatility in both directions.

The options market repriced aggressively, skew surged, and put demand rose, indicating defensive positioning. The macro backdrop suggests growing market fatigue.

From Rally to Pullback
After peaking near $117,000 during the FOMC-driven rally, Bitcoin has transitioned into a correction, aligning with the classic "buy the rumor, sell the fact" pattern. This analysis looks beyond short-term fluctuations to assess broader market structure, using long-term on-chain metrics, ETF demand, and derivatives positioning to evaluate whether this pullback is a healthy consolidation or the start of a deeper contraction.

On-Chain Analysis
Volatility Context

The current retreat from the $124,000 all-time high (ATH) to $113,700 represents only an 8%–12% decline—modest compared to this cycle’s 28% drawdown or prior cycles’ 60%+ corrections. This aligns with a long-term trend of declining volatility, both across macro cycles and within cycle phases, resembling the steady grind of 2015–2017, though without the late-stage parabolic surge.

[Image: Volatility comparison chart]

Cycle Duration

Overlaying the past four cycles shows that even though the current trajectory closely mirrors the previous two, peak returns have diminished over time. Assuming $124,000 marks the global top, this cycle has lasted ~1,030 days, very close to the ~1,060-day duration of the prior two cycles.

[Image: Cycle duration and return comparison chart]

Measuring Capital Inflows

Beyond price action, capital deployment offers a more reliable perspective.

The realized cap has experienced three distinct waves of growth since November 2022, lifting the total to $1.06 trillion, reflecting the scale of capital inflows underpinning this cycle.

[Image: Realized cap growth chart]

Contextual comparisons:

• 2011–2015: $4.2 billion

• 2015–2018: $85 billion

• 2018–2022: $383 billion

• 2022–present: $678 billion

This cycle has absorbed $678 billion in net inflows—nearly 1.8x the previous cycle—highlighting the unprecedented scale of capital rotation.

[Image: Realized cap increase per cycle chart]

Peak Profit Realization

Another distinction lies in the inflow structure. Unlike single waves in early cycles, this cycle has seen three clear, multi-month surges. The Realized Profit/Loss Ratio shows that each time profit realization exceeded 90% of coins moved, it signaled a cyclical peak. Having just exited a third such extreme, probabilities favor a cooling phase next.

[Image: Realized profit/loss ratio chart]

Long-Term Holder Profit Dominance

The scale becomes even clearer when focusing on long-term holders (LTH). This metric tracks cumulative LTH profits realized from the break of the prior ATH to the cycle peak. Historically, heavy LTH selling marks tops. This cycle, LTHs have realized 3.4 million BTC in profits—already exceeding prior cycles—highlighting both the cohort’s maturity and the magnitude of capital rotation.

[Image: LTH realized profit chart]

Off-Chain Analysis
ETF Demand vs. LTH Selling

This cycle has also been shaped by the tug-of-war between LTH profit-taking and institutional demand via U.S. spot ETFs and DATs. With ETFs now a structural force, price reflects this push-pull: LTH selling caps upside, while ETF inflows absorb selling and sustain cycle progression.

[Image: ETF inflow vs. LTH selling chart]

Fragile Balance

ETF inflows have so far balanced LTH selling, but the margin for error is slim. Around the FOMC meeting, LTH selling surged to 122,000 BTC/month, while ETF net inflows plummeted from ~2,600 BTC/day to near zero. The combination of increased selling pressure and weakened institutional demand created a fragile setup, paving the way for weakness.

[Image: ETF net inflow vs. LTH selling pressure chart]

Spot Market Pressure

This fragility was visible in spot markets. During the post-FOMC sell-off, volume spiked as forced liquidations and thin liquidity amplified the downward move. Although painful, a temporary bottom formed near the short-term holder (STH) cost basis around $111,800.

[Image: Spot volume and price chart]

Futures Deleveraging

Simultaneously, futures open interest (OI) dropped sharply from $44.8 billion to $42.7 billion as Bitcoin broke below $113,000. This deleveraging event flushed out leveraged longs, amplifying downward pressure. While destabilizing in the moment, this reset helps remove excess leverage and restore balance to derivatives markets.

[Image: Futures open interest and price chart]

Liquidation Clusters

The perpetual futures liquidation heatmap provides further detail. When price broke below the $114,000–$112,000 range, dense clusters of leveraged longs were liquidated, causing significant sell-side pressure and accelerating the decline. Risk pockets remain above $117,000, leaving the market vulnerable to liquidity-driven swings in both directions. In the absence of stronger demand, vulnerability near these levels increases the risk of further sharp volatility.

[Image: Liquidation heatmap chart]

Options Market
Volatility Repricing

Turning to options, implied volatility (IV) offers a clear view of how traders navigated a turbulent week. Two key catalysts shaped the landscape: the year’s first rate cut and the largest liquidation event since 2021. IV climbed ahead of the FOMC as hedging demand built but faded quickly after the cut was confirmed, suggesting the move was largely priced in. However, sharp futures liquidations on Sunday reignited demand for protection, with one-week IV leading the rebound across tenors.

[Image: Implied volatility term structure chart]

Market Reprices Rate Cuts

Post-FOMC, there was aggressive demand for puts, either as protection against a sharp decline or to capitalize on volatility. Just two days later, the market delivered on this signal with the largest liquidation event since 2021.

[Image: Put/Call volume ratio chart]

Put/Call Flows

After the sell-off, the put/call volume ratio trended lower as traders took profits on in-the-money puts while others rotated into cheaper calls. Short- and mid-term options remain heavily skewed toward puts, making downside protection expensive relative to upside exposure. For participants constructive on year-end prospects, this imbalance creates opportunities—either to accumulate calls at relatively low cost or to finance them by selling expensive downside risk.