Matrixport Research: Bitcoin has fallen into a bear market range. Will a weaker dollar become the next pivot point?

After the latest round of corrections, the price structure of Bitcoin has further weakened. The most intuitive signal is that it is still operating below the 21-week moving average, consistent with the technical characteristics of a bear market. Meanwhile, the policy uncertainty of the U.S. midterm election year, combined with the typical four-year cycle of Bitcoin, makes this historical time window more likely to experience price pressure. However, against the backdrop of a weakening dollar and the ongoing narrative of re-inflation, we maintain a relatively positive judgment on overall risk assets, but our view on Bitcoin still requires cautious assessment in conjunction with structural signals.

Price Structure Under Pressure: Selling Pressure Not from Institutions, but from Dispersed Speculative Losses

In the past six months, Bitcoin has failed to strengthen in sync with gold and other risk assets. Since June 2025, the continuous selling by early holders has been seen as a major suppressive factor, but since October, gold has accelerated upward while Bitcoin has entered a correction, indicating that a single factor is no longer sufficient to explain the current divergence.

The flash crash on October 10, 2025, became an important watershed. This event led to a significant widening of relative pricing across assets and inter-exchange price differentials, squeezing the risk budgets of market makers and market-neutral funds, resulting in weakened short-term liquidity. Notably, there are almost no signs of concentrated losses among major trading institutions; on the contrary, realized losses have occurred more broadly among a wider range of market participants. Data shows that traders on the Hyperliquid platform contributed over 50% of the realized losses, indicating that this round of impact has been primarily borne by speculative retail investors rather than dominated by institutions.

Changes in Capital and Narrative: Weakening Dollar as a Supporting Variable, but Risk Appetite Still Cooling

On a macro level, the re-inflation narrative remains, and the dollar continues to operate in a weak range. Historically, Bitcoin tends to gain mid-term support more easily during prolonged periods of dollar weakness. Recently, Trump's comments on the weakening dollar have neither released clear supportive signals nor made strong statements, leading the market to interpret this as an increased tolerance for a weak dollar, suggesting that short-term re-inflation trades may still find support.

However, from a capital perspective, there are signs of marginally cooling risk appetite. The one-year rolling growth rate of stablecoin supply for USDT and USDC both peaked around October 2025 and has significantly slowed since, with USDC showing a more pronounced decline. At the same time, the overall search interest in Bitcoin has remained low since peaking in 2021, reflecting a decrease in retail interest rather than a resurgence of panic. Discussions related to quantum computing have cooled, but still somewhat suppress the narrative of Bitcoin as a "safe asset," making it difficult for its safety premium to recover.

Overall, although the 14-year uptrend of the dollar has been broken, this change has historically favored Bitcoin in establishing mid- to long-term support. However, the current price structure remains weak, with rebounds mostly being sold off, and it continues to operate within a consolidation range under a bear market framework. Our view on Bitcoin has shifted to a more constructive stance compared to before, but we still need to wait for further improvements and confirmations of technical and capital signals before moving to a more clearly bullish position.

The above views are derived from Matrix on Target. Contact us to obtain the complete report from Matrix on Target.

Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.