On February 3, Bitcoin entered another phase of persistent yet slow-paced decline. The core issue is not concentrated selling or extreme panic, but rather the absence of the stable buying pressure that the market had previously relied on.
According to Glassnode data, investors entering Bitcoin through U.S. spot Bitcoin ETFs have an average cost basis of approximately USD 84,100. With Bitcoin trading around USD 78,500, this group is currently facing unrealized losses of roughly 8%–9%, making them one of the most representative groups of passive holders under pressure in the current market.
ETF Investors Have Faced Losses Before, but Conditions Have Changed
This is not the first time ETF investors have experienced unrealized losses. As early as November last year, when Bitcoin briefly fell below USD 89,600—near the average ETF cost at the time—the market viewed it as a test of the conviction of newly institutionalized capital.
Subsequently, continuous inflows in early 2024 pushed the overall ETF cost basis lower, returning holdings to profitability. However, later-stage inflows entered at higher prices, leaving their cost basis above current levels. As a result, marginal buyers are now far less tolerant of further downside, weakening incremental demand.
Down Over 35% From the Peak, Yet No Panic Selling
From a price perspective, Bitcoin has declined by more than 35% from its 2025 high, briefly falling below USD 77,000 during a weekend period of relatively thin liquidity. Unlike previous cycles, however, the market has not seen widespread panic or cascading liquidations.
Analysts suggest this pullback reflects a combination of structural factors, including:
- A temporary exhaustion of capital inflows
- Overall market liquidity contraction
- Reduced attractiveness of macro asset allocation
- Notably, Bitcoin has failed to respond meaningfully to traditionally bullish factors such as U.S. dollar weakness or heightened geopolitical risk. Its correlation with other risk assets has also shown temporary decoupling, leaving price action without a clear directional driver.
The Core Question Is Not “Who Is Selling,” but “Who Is No Longer Buying”
Compared with the sharp sell-off in October, the defining difference of the current decline lies in market sentiment structure.
There is no visible panic—only absence.
The rally that pushed Bitcoin above USD 125,000 was fueled by expectations of improving regulation, sustained institutional inflows, and retail sentiment resonance. After the large-scale leveraged liquidations in October, however, many of the same participants who drove prices higher have chosen to step aside and observe, rather than continue adding exposure.
In such an environment, price declines do not depend on aggressive selling, but are instead driven by insufficient liquidity and the disappearance of marginal buyers.
Trustformer KYT: Identifying Structural Risks Through On-Chain Behavior
As ETF investors collectively remain underwater and spot buying interest weakens, the key market risk is no longer price alone. Instead, it lies in whether specific addresses or capital pathways are experiencing concentrated outflows, potentially triggering structural stress.
Through analysis of on-chain transaction paths, address relationships, and high-risk behavioral patterns, Trustformer KYT can help identify whether the current correction is accompanied by abnormal fund migration, cross-platform transfers, or rising activity from risk-associated addresses. This enables market participants to distinguish between systemic adjustments and declines driven by non-standard capital behavior.
During periods of “quiet declines,” on-chain behavioral risk identification tools are increasingly becoming a critical complementary lens for understanding the market’s true underlying condition.