After a recovery phase in mid-October, Bitcoin (BTCUSD) has retreated to around 106,000 USD, reflecting investors’ cautious sentiment as fundamental factors have yet to provide a clear catalyst for the next directional move.
Although the long-term outlook for Bitcoin remains positive, the short-term picture is being shaped by a mix of factors including prolonged monetary tightening, the strength of the U.S. dollar, and a slowdown in ETF inflows.
The “higher for longer” monetary stance is one of the key factors restraining Bitcoin’s short-term momentum.
Following its late-October policy meeting, the Federal Reserve (Fed) cut interest rates by 25 basis points, but emphasized that this was not the beginning of a prolonged rate-cutting cycle.
Comments from Chair Jerome Powell indicated that the Fed remains cautious, as core inflation still sits well above the 2% target.
Market expectations for a rate cut in December have been nearly eliminated, with the U.S. 10-year Treasury yield holding around 4.1% and the U.S. Dollar Index (DXY) steady at 99.6, near a three-month high.
This “higher-for-longer” environment increases the opportunity cost of holding non-yielding assets such as Bitcoin, while also dampening short-term speculative momentum.
However, in the medium term, this stance could lay the groundwork for a potential easing cycle in the first half of 2026, as signs of a slowdown in the U.S. economy emerge. According to the Atlanta Fed’s GDPNow model, fourth-quarter 2025 growth is projected at 1.6%, down from 2.3% in the previous quarter. If this deceleration continues, the Fed is likely to shift from maintaining to easing policy, creating favourable conditions for capital to return to risk assets, including Bitcoin.
In addition, ETF inflows remain a key factor to watch. Although institutional inflows have slowed, this does not necessarily indicate weakness. After record-breaking spot Bitcoin ETF inflows in September–October, data from SoSoValue show a noticeable deceleration over the past three weeks.
This slowdown partly reflects a market rebalancing phase — institutional investors who deployed capital aggressively in the early stages are now pausing to assess performance and await clearer macro signals. More importantly, ETF trading volumes have not dropped significantly, suggesting that capital is not exiting, but rather staying on the side-lines.
Notably, while Bitcoin inflows have slowed, the newly launched Solana ETFs in the U.S. attracted 200 million USD in their first week of trading. This phenomenon does not indicate a shift away from Bitcoin but instead highlights institutional portfolio diversification during a period of market consolidation. Such behaviour is typical in previous bull cycles: capital temporarily rotates into altcoins during consolidation phases before returning to Bitcoin once macro conditions turn more favourable.
An important indicator confirming that long-term confidence in Bitcoin remains strong is realized capitalization — a metric that measures the aggregate value of all BTC based on their last transacted price. According to on-chain data, this figure has increased by roughly 8 billion USD over the past month, signalling that long-term holders are still accumulating, rather than exiting the market. This steady accumulation helps Bitcoin avoid deep corrections like those seen during the 2022–2023 period.
In the short term, the Fed’s “higher for longer” policy and the slowdown in ETF inflows may keep Bitcoin trading in a cautious accumulation range just above the psychological 100,000 USD level.
In the medium term, if the Fed begins to shift its policy stance in the first half of 2026, Bitcoin is likely to be one of the earliest beneficiaries. The combination of lower interest rates, improved liquidity, and the expansion of the ETF ecosystem (including Ethereum, Solana, and potentially XRP) could attract a new wave of institutional inflows, thereby igniting a renewed bullish cycle for Bitcoin.
Leave a Comment