A Shift in Institutional Demand
A key metric that had supported the bullish case for Bitcoin has recently flipped. For the first time in seven months, net purchases of Bitcoin by institutional investors have fallen below the daily amount of new Bitcoin mined.
According to Charles Edwards, head of Capriole Investments, this indicates a “concerning shift in market dynamics”. The demand from two major institutional sources has declined in a staggered manner:
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Corporate Treasuries (BTC DATs): Buying from companies holding Bitcoin on their balance sheets diminished significantly starting in mid-August.
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Spot Bitcoin ETFs: Initially, these funds compensated for the lack of corporate buying. However, following the market downturn in early October, ETF inflows also contracted sharply. Since October 11, spot Bitcoin ETFs have seen $1.67 billion in net outflows, with a single day recording $191 million in outflows.
This break in the previous liquidity flow has removed a major pillar of support for the 2025 rally.
The Other Side of the Equation
While you mentioned miner sales of approximately $172 million, the broader context of their operations adds another layer to the current market pressure.
Miners are facing increased production costs. For instance, Marathon Digital (MARA), a major public miner, reported an average cost of $33,735 per Bitcoin in their latest quarter, a figure they state is among the lowest in the industry. This suggests that for many miners, costs are high enough to necessitate selling to cover operational expenses, especially when the price consolidates.
Furthermore, some miners are strategically adapting to this environment by diversifying their revenue streams. Marathon Digital, for example, is exploring how to leverage its infrastructure for other high-demand fields like AI inference and high-performance computing (HPC). This strategic shift aims to reduce their sole dependence on Bitcoin’s price, which could moderate their future selling pressure.
What This Means for the Market
The combination of these factors creates the liquidity risk and volatility you described.
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Concentrated Selling Pressure: With institutional net demand waning and miners needing to sell to cover costs, the market’s ability to absorb sell orders at key resistance levels near $111,000 is reduced.
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Evolving Market Structure: The decline in institutional purchases signals a potential short-term reduction in confidence. However, analysts also note that institutions have used previous dips as buying opportunities, and the long-term trend for Bitcoin is considered by some to remain intact due to a favorable macro environment, including Federal Reserve rate cuts.
In summary, the market is currently navigating a phase where a key source of demand has temporarily paused while selling pressure from miners persists. As you concluded, the short-term direction will likely be defined by whether institutional flows, particularly into ETFs, can recover and once again exceed the daily miner supply.
