All the Bullish Narratives Are Still There: So Why Is Bitcoin (BTC) Breaking Down?

BTC, ETH, and SOL are losing all major SMAs signals amid deteriorating structure, even though bullish catalysts remain “on paper.”

After a devastating downturn this week, Bitcoin climbed above $103,000, posting a gain of just over 1% in the past 24 hours. This has revived hopes of a recovery.

But fresh data suggest that the crypto asset went below critical trendlines, and analysts say multiple weekly closes under its 50-week moving average confirm the cycle top.

Vanishing Demand

Year-to-date, both gold and the S&P 500 have now outperformed Bitcoin, despite the dozens of seemingly bullish catalysts that the market has been leaning on into year-end. These include rate cuts, regulation, stablecoins, tokenization, liquidity, major trade agreements, strong GDP prints, Big Tech earnings, the “Big Beautiful Bill,” and the expectation of pro-crypto policy under US President Donald Trump.

Michael Nadeau, the founder of ‘The DeFi Report,’ says the bull case still looks “good on paper,” but crypto market participants appear to be stuck in a zone between “hope and disbelief” as sentiment weakens and fundamentals deteriorate. Momentum data shows BTC, ETH, and SOL have all lost their 50, 100, and 200-day SMAs.

The most critical line that the analysts are watching is $102,000, which happens to be Bitcoin’s 50-week moving average. In previous cycles, once BTC posted multiple weekly closes below its 50-week MA, the cycle top was already in. Meanwhile, Bitcoin’s longer 200-week moving average stands at $54,700.

Nadeau expects the asset’s price to eventually converge toward that 200-week MA (which is still rising) at the bottom of the bear market, if it is indeed heading into one.

BTC, ETH, and SOL are now nearing oversold RSI levels (below 30) while longer tail altcoins are already oversold, which is normally a bull-market “buy the dip” signal. But the flow situation is flashing a warning. Bitcoin ETFs have been one of the most successful financial products in history from a net flows and AUM perspective, but since October 10, these vehicles have posted $1.4 billion in net outflows.

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‘Hopium’ In The Market

According to the report, the issue is not the size of outflows, but the absence of inflows, which points to demand depletion. Strategy currently holds more than 641,000 BTC. From October 2023 through July 2025, the firm purchased 476,000 BTC, equal to 1.19x the total BTC mined in that period. But in the last three months, the firm bought only 12,200 BTC. It currently holds 12x more BTC than the second-largest corporate treasury, and represents roughly 65% of the BTC Treasury market.

With ETF demand fading and the largest buyer pausing, the report turns to on-chain cohorts. Long-term holders are selling more, indicating the third distribution wave of this cycle. The report says price expansions historically begin only after long-term holders move from distribution back to steady accumulation. In previous cycle peaks (2017 and 2021), it took 9.5-10 months for the price to bottom after long-term holders resumed net accumulation.

Those coins are now being transferred to short-term holders, who often end up capitulating later at lower levels. This is when long-term holders return. As far as the sentiment is concerned, Nadeau said that it is still anchored to “buy the dip” because that strategy worked for almost two years straight.

Nadeau also pointed to a recent essay from macro investor Jordi Visser wherein the latter described that Bitcoin is in a “silent IPO” phase and added that the market’s reaction to bullish “therapy-style” narratives shows that there is still a huge amount of “hopium” left in the system.