Bitcoin ETF Flows Reverse as Stablecoin Supply Decreases

NYDIG's research indicates the recent decline in Bitcoin is due to structural liquidity issues rather than emotional selling. Key factors include:

A large liquidation in early October reversed spot ETF flows, lowered digital asset treasury (DAT) premiums, and reduced stablecoin supply, indicating liquidity withdrawal.
Spot Bitcoin ETFs shifted from buyers to sellers, reducing demand and impacting prices.
Bitcoin's market dominance rose above 60% as traders moved away from smaller assets, consolidating into more liquid options.
Despite cooling demand, the DAT sector remains solvent with structures allowing for payment flexibility.
Analysts highlight a CME gap at $85,200 as a potential price target before a rebound to $90,000–$96,000.

The current market stress relates to flows and liquidity, not solvency. While long-term prospects like institutional interest persist, short-term volatility is expected until liquidity improves.