Written by: UkuriaOC, CryptoVizArt, Glassnode
Compiled by: AididiaoJP, Foresight News
Summary
Despite Bitcoin setting a new all-time high of $124,400, its capital inflow continues to decline. This period of relatively weak capital inflow highlights a noticeable decrease in investor demand willingness at this stage.
As Bitcoin's price reached an all-time high, the total open contracts of mainstream altcoins also hit a historical high of $60 billion, highlighting the high level of market leverage. However, this situation was short-lived, and as prices corrected downwards, open contracts decreased by $2.6 billion, marking the tenth-largest drop on record.
Ethereum is often regarded as a barometer asset, with its strong performance periods typically correlating with the broader 'altcoin season' phases in the digital asset market. Notably, Ethereum's open contract dominance has reached its fourth-highest level on record, while its perpetual futures trading volume dominance has surged to a new historical high of 67%.
When we observe Bitcoin's performance from each cyclical low, we can see that in the two cycles from 2015-2018 and 2018-2022, the time to reach the historical peak, calculated in relative time, is about 2-3 months later than the current time point in the cycle.
Slowing Capital Flow
Following last week's high of $124,400, Bitcoin's upward momentum has stagnated, with the price retreating to a low of $112,900, a decline of nearly 9.2%. This drop was accompanied by a noticeable weakening of capital inflows in recent weeks, indicating that investors are unwilling to inject new funds at these high price levels.
When we compare the current capital inflow rate with previous instances when the historical high was breached, we find that the percentage growth of realized market capitalization is far lower than during the breaks of the historical high in March and December 2024. When breaking $100,000 for the first time at the end of 2024, the monthly growth rate of realized market capitalization reached +13%, while the peak in the current environment is much lower at only +6% per month.
This period of relatively weak capital inflow highlights a noticeable decrease in investor demand willingness at this stage.
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Profit-taking activity has also declined in recent weeks, which can be observed through the volatility-adjusted net realized profit/loss metric. This tool measures realized profits and losses in Bitcoin (BTC) and standardizes them against the continuously growing market value of Bitcoin in different cycles. It further refines this by adjusting for the 7-day realized volatility to explain the diminishing returns and slowing growth rates as Bitcoin matures as an asset.
It is noteworthy that we can observe three instances of large-scale profit-taking occurring near the breakout points of $70,000 and $100,000 in 2024, as well as near the historical high of $122,000 reached in July this year. These events indicate a strong willingness among investors to lock in substantial profits, while the demand impulse to absorb this sell-side supply is equally strong.
In contrast, during this latest attempt at a historical high, the realized profit-taking volume has significantly decreased. One explanation for this dynamic is that, despite lower sell-side pressure from existing holders, the market has failed to sustain upward momentum.
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As the local market momentum reverses and prices continue to decline, we turn our attention to realized loss events to assess whether there have been any significant negative changes in investor sentiment. In this local downtrend, investors' realized losses have accelerated, reaching a value of $112 million per day.
However, this is still within the typical range during a local pullback within the entire bull market cycle. Many events, such as the yen arbitrage trade unwinding in August 2024 and the 'Trump tariff panic' from March to April 2025, led to significantly higher surrender volumes.
This suggests that, although increasing losses may begin to challenge this view, the current downtrend has not yet had a substantive impact on investor confidence.
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Leverage-driven Decline
Despite the relatively subdued on-chain profits and losses during the recent formation of historical highs and the subsequent correction, activity in the futures market has accelerated. The total open contracts of Bitcoin futures remain at a high of $67 billion, highlighting the high level of leverage present in the current market.
Notably, in the recent sell-off, over $2.3 billion in open contracts were liquidated, with only 23 trading days recording larger nominal declines. This underscores the speculative nature of the market, where even moderate price fluctuations can trigger significant contractions in leveraged positions.
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Digging deeper, we can assess the total scale of long and short liquidations during the formation of historical highs and the subsequent price contraction.
Although liquidation volumes did indeed rise during these events, with short liquidations reaching $74 million during the historical high and long liquidations peaking at $99 million during the downtrend, these levels are significantly lower than those observed during similar periods of extreme price volatility this year. This suggests that a considerable portion of recent contract liquidations may be voluntary and thus risk-managed, rather than driven by forced liquidations from excessive leverage.
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When we assess the futures open contracts of major altcoins (ETH, SOL, XRP, DOGE), we notice that their total soared to a new historical high of $60.2 billion last weekend. This is almost on par with the open contract size of Bitcoin. However, this situation was short-lived, and subsequently, as prices corrected downwards, open contracts decreased by $2.6 billion, marking the tenth-largest drop on record.
These rapid fluctuations indicate that altcoins are currently attracting significant attention from investors, significantly exacerbating the reflexivity and fragility of the digital asset market.
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Additionally, the total liquidation volume of mainstream altcoins has recently been quite high, peaking at $303 million per day, with the liquidation volume experienced being more than twice that of the Bitcoin futures market.
Additionally, the liquidation scale from last weekend now ranks as the 15th largest on record, indicating an increased willingness to take leveraged exposure in the altcoin space.
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Increased Speculation
Over the years, Ethereum has often been regarded as a barometer asset, with periods of strong performance typically correlating with broader 'altcoin season' phases in the digital asset market.
This relationship can also be observed through the dominance of open contracts between Bitcoin and Ethereum, reflecting the changing risk appetite of market participants. As it stands;
Bitcoin Open Contract Dominance: 56.7%
Ethereum Open Contract Dominance: 43.3%
Ethereum's share of open contracts has been rapidly rising recently, indicating that market attention is significantly shifting towards further out on the risk curve. Notably, Ethereum's open contract dominance has reached its fourth-highest level on record, highlighting a significant increase in speculative activity. It is important to note that, as the second-largest digital asset, Ethereum is one of the few assets capable of accommodating institutional-sized capital.
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When viewed through the lens of trading volume, this trend becomes even more striking. Ethereum's perpetual futures trading volume dominance has skyrocketed to a new historical high of 67%, marking the strongest shift on record.
The significant rotation of trading activity has increasingly drawn investors' attention to the altcoin space, pointing to an acceleration of risk appetite within the current market cycle.
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Crossroads
When we observe Bitcoin's performance from each cyclical low, we can see that in the two cycles from 2015-2018 and 2018-2022, the time to reach the historical peak, calculated in relative time, is about 2-3 months later than the current time point in the cycle.
Although these are just two examples before a mature cycle, which is insufficient to assume that this synchronicity will continue, it is still a noteworthy data point. This perspective is particularly relevant when considering the wave of on-chain profit-taking over the past two years and the visible high levels of speculative activity in today's derivatives market.
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To further support this observation, we can look at the length of time that the percentage of Bitcoin's circulating supply remains above +1 standard deviation in each cycle.
In the current cycle, this period has now extended to 273 days, making it the second-longest on record, only behind the 335 days of the 2015-2018 cycle. This indicates that, when measured from the perspective of the vast majority of supply held in profit, the duration of the current cycle is comparable to previous cycles.
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We can also measure the cumulative profits realized by long-term holders from the time a new cyclical historical high is reached until the peak of the cycle. From this perspective, we find that the group of long-term holders (usually most active at cyclical extremes) has realized more profits than all previous cycles except for one (the 2016-2017 cycle).
This observation aligns with previous indicators, adding another dimension through the lens of sell-side pressure. Overall, these signals reinforce the view that the current cycle is in its historical late stage.
However, each cycle has its own characteristics, and there is no guarantee that market behavior will follow such a fixed time pattern.
Nevertheless, these dynamics raise an interesting question. Is the traditional four-year cycle still effective, or are we witnessing its evolution? These questions will be answered in the coming months.
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Conclusion
Bitcoin's capital inflows show signs of weakness, with demand decreasing even as prices reached a new all-time high of $124,400. This waning willingness coincides with a surge in speculative positions, as the total open contracts of major altcoins briefly reached a historical high of $60 billion before correcting downwards, reducing by $2.5 billion.
Long regarded as a barometer for 'altcoin season', Ethereum is once again at the forefront of this rotation. Its open contract dominance has surged to the fourth-highest level on record, while perpetual futures trading volume dominance has skyrocketed to a new historical high of 67%, marking the strongest structural shift to date.
From a cyclical perspective, Bitcoin's price trend also echoes previous patterns. In the two cycles from 2015-2018 and 2018-2022, the time to reach the historical peak from the cyclical low was only 2-3 months later than the current time point we are at. At the same time, the profit levels realized by long-term holders are comparable to those during previous market frenzy stages, reinforcing the impression that the market is in the later stages of the cycle.
Overall, these signals highlight increased leverage, profit-taking, and heightened speculation, all characteristics of historical market maturation phases. However, each cycle has its own characteristics, and it cannot be determined that Bitcoin and the broader market will follow a fixed time blueprint.
