OpinionMarkets
|9 min ReadCoinbase Monthly Report: Bitcoin Waiting For Proof
Lucca Menezes
Senior Analyst
Published
Jan 16, 2026
Alpha Briefing: Bitcoin has just delivered one of its worst risk-adjusted drawdowns of the cycle, with support bands broken and major buyers stepping back. Until ETF and stablecoin flows turn, the setup favors patience and trend-aware entries, even if a December macro pivot sparks a relief rally.
November has felt like a slow-motion capitulation for bitcoin. On a volatility-adjusted basis, BTC has underperformed US stocks by more than three standard deviations since early October, while the S&P 500 has only slipped about one standard deviation. That kind of gap sits in the same bucket as the Terra-Luna collapse, the FTX failure and the 2025 tariff shock, yet this time the pain has landed with less drama and more exhaustion.
The more concerning piece is who is not buying. Retail wallets are timid, institutions are redeeming through ETFs, and long-term holders are quietly distributing instead of absorbing dips. The usual “strong hands” that stabilize drawdowns have stepped aside just as forced sellers have appeared. That is why price sliced through onchain and technical supports with so little resistance.
At the same time, macro data do not scream recession. GDP is running close to four percent annualized after a shallow contraction earlier in the year. The stress is coming from somewhere else: a K-shaped recovery and a Fed decision that split the market between fear and hope until odds of a December cut suddenly repriced.
Fear, Flows And The K-Shaped Backdrop
A lot of crypto’s current gloom has been imported straight from rates markets. Traders spent most of November fixated on the Federal Reserve’s December 10 meeting, worried that another hike or a “higher for longer” message would crush risk again. As recently as late November, internal research desks argued that private data pointed to another twenty five basis point move. Since then, prediction markets such as Polymarket have flipped hard, with the implied probability of a cut jumping from roughly twenty two percent to around seventy five percent.
The macro tape, on the surface, looks decent. US output contracted by about half a percent in the first quarter, then rebounded to roughly 3.8 percent annualized in Q2 2025. The problem is the shape of that recovery. Economists like Peter Atwater and Mark Zandi describe it as K-shaped: higher-income households and capital owners push further ahead while large parts of the middle struggle with stagnant wages and rising costs.
For crypto, that matters because almost all the financial firepower is concentrated at the top. CNBC data show that the richest ten percent of US households hold close to ninety percent of domestic equities, and a similar skew applies to digital assets. Those same groups are now benefiting from an AI-driven jump in productivity and stock prices, while headlines highlight white-collar layoffs and the squeeze on middle management. Corporate margins improve, but household income security for large swaths of potential retail buyers deteriorates.
So far, the hard link between AI-related job losses and BTC returns looks weak. A simple regression on post-ChatGPT monthly data produces an R-squared near 0.14, essentially saying “not much signal yet.” That leaves open a powerful possibility. If wealthy cohorts continue to enjoy equity gains and still sit on roughly 7.5 trillion dollars in US money market funds, some of that sidelined cash can be redirected into regulated BTC vehicles once volatility calms and macro risk feels less binary.
Until then, the more immediate driver is positioning and liquidity inside the crypto system itself.
Bitcoin’s Support Structure Has Broken
Technically and onchain, bitcoin has lost its safety net. Price now trades decisively below the 200-day moving average, the cost basis of short-term holders and the so-called 75 percent profit line that previously marked robust bull-market support. When that last band failed in mid-November, roughly a quarter of supply flipped into loss, and realized losses spiked to levels last seen in the FTX collapse.
The 98–100k region was the core onchain “battlefield” where a large cluster of holders shared a similar cost basis. Once price smashed below that, the realized price distribution thinned out. There are simply fewer addresses with strong economic reasons to defend the zones immediately underneath.
That is why BTC fell through the 90–85k pocket with almost no bounce attempts. Until a new base of realized price density builds, the higher-probability setup is to wait for a high-volume reclaim of broken levels, especially around 98–100k, instead of repeatedly fading momentum into a liquidity vacuum.
Derivatives are telling the same story. The options Bull-Bear Index, which tracks whether traders are paying up for calls or puts, has turned clearly negative at short maturities and slipped into bearish territory at the 30–90 day bucket. Only the long-dated tenors sit closer to neutral, which looks more like uncertainty about the path to 2026 than conviction in a full-blown bear market.
Ownership dynamics are deteriorating as well. Long-term holders are net distributing over the last month, with old coins flowing out of dormant wallets. High-profile “OG” cohorts reportedly exited large stacks between late October and November. Whether or not any single whale drives the market, the pattern matters: when long-dormant supply sells into weakness, it removes a key psychological anchor.
The ETF channel, which was a powerful marginal buyer earlier in the year, has flipped. The trailing seven-day sum of US spot BTC ETF flows is deeply negative, making November 2025 a record month for net outflows. Every time allocators redeem, issuers need to sell spot or reduce hedges, turning that once-constructive flow into a headwind.
Digital asset treasuries have cooled as well. Market-value-over-NAV ratios for major listed BTC vehicles, including MicroStrategy, have slipped below parity for the first time since 2024, even as these entities collectively hold around three and a half percent of supply. Persistently sub-1.0 readings invite shareholder pressure to slow new purchases, hedge, or even sell into strength to close the discount.
Finally, crypto-native dollar liquidity is fading. Aggregate stablecoin supply, which had been grinding higher through most of 2025, is now contracting, with 30-day momentum at its weakest since 2023. Less stablecoin float usually means deleveraging and capital leaving onchain rails, reducing the “dry powder” available to chase any sudden move higher.
From DCA Myth To Trend-Aware Accumulation
In this environment, the old mantra of “buy every dip forever” is getting an uncomfortable stress test. A long-horizon backtest from 2010 to late 2025 shows that blindly allocating a fixed dollar amount into BTC every day dramatically underperforms a simple trend-aware variant. An investor who only DCA’d while price traded above the 50-day moving average, parked cash during downtrends, and deployed that cash when price reclaimed the 50-day line would have ended up with an equity curve roughly five times larger than naive DCA.
The logic is simple and powerful. You still harness long-term compounding, but you avoid sending the bulk of your capital into deep, persistent drawdowns. Today’s backdrop of broken support, defensive options positioning, ETF redemptions, pressured treasuries and shrinking stablecoin float is textbook “wait for proof” territory.
For traders and allocators, that proof likely has three pillars. First, a convincing, high-volume reclaim of key lost levels, especially the 98–100k region where onchain resistance now sits. Second, a sustained turn in spot ETF and stablecoin flows from net negative to clearly positive. Third, a macro shift that validates the current repricing of Fed odds rather than yanking the cut away again.
If the Federal Reserve does deliver a December cut and liquidity indicators start to turn, BTC’s current extreme underperformance versus equities could unwind quickly into a sharp upside squeeze. If not, the market may need to build a new base much lower. Either way, the data argue that you do not need to be early to every bounce. In a K-shaped economy with selective liquidity, being selective with your own entries is not cowardice. It is how you stay alive long enough to ride the next beautiful leg of the cycle.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.