Cryptocurrencies were supposed to make a splash this year.
Bitcoin is seeing a wave of strong ETF inflows heading into the fourth quarter, Digital Asset Treasury (DAT) is positioning itself as a leveraged bet on the next move higher, and analysts are refreshing charts to show the final three months of the year have been the cryptocurrency’s most reliable winning streak.
Coupled with the promise of easier monetary policy and a friendlier political backdrop in Washington, many investors believe Bitcoin’s price will hit new records by the end of the year.
Instead, here’s what happened: October’s $19 billion cascading liquidations created a liquidity gap, spot altcoin ETFs failed to offset the selling pressure, and a new batch of Treasury-heavy crypto stocks have begun to shift from structural buyers to potentially forced sellers.
Bitcoin is down 23% since the beginning of October, which is poor performance on its own, but even worse considering the continued gains in stocks and precious metals.
Here’s how each year-end “catalyst” goes from a flywheel of promise to a headwind of hardship.
DAT flywheel in chaos
The frenzy of digital asset treasury—hastily launched public companies (mostly this year) trying to copy Michael Saylor’s strategy (MSTR)—promises to bring a flywheel and steady buying pressure to cryptocurrency prices.
However, after a brief buying excitement in the spring, investors quickly lost enthusiasm. Then, as cryptocurrency prices began to fall in October, DAT sales really accelerated. Their stock prices plummeted, with most companies falling below their net asset value, limiting their ability to raise capital by issuing stock and debt. At first, buying slowed, then stopped altogether—with a few exceptions. Now, rather than initially planning to convert investors’ fiat currencies into crypto assets, DAT has begun using U.S. dollars to buy back shares. The latest example is former high-profile stock KindlyMD (NAKA), whose share price has fallen to such lows that its Bitcoin holdings are worth more than double the company’s enterprise value.
There are concerns that more may follow suit and could be forced to sell off, dumping assets into an already fragile market, throwing the so-called flywheel into disarray and putting pressure on the market.
Altcoin ETFs
With market sentiment deteriorating across the board, the long-awaited U.S. debut of spot altcoin ETFs has no chance of making an impact — despite some of the funds attracting commendable inflows.
The Solana ETF has brought in $900 million in assets since the end of October, according to SoSoValue data. In just over a month, net inflows into the XRP instrument exceeded $1 billion.
However, this strong demand has not translated into the price of the underlying token. SOL has plummeted to 35% since the ETF’s debut, while XRP is down nearly 20%.
ETF for smaller altcoins – hedera (HBAR), , – Meanwhile, demand is minimal as risk appetite disappears.
Seasonal
Analysts noted that Bitcoin had a strong year-end performance, its strongest ever, with the fourth quarter delivering the asset’s strongest returns. This year promises to drive home to investors the old adage: past performance is no guarantee of future results.
CoinGlass data shows that since 2013, Bitcoin’s average return in the fourth quarter was 77%, with a median gain of 47%. Over the past twelve years, it has delivered positive returns in eight of those years—the highest hit rate of any quarter.
Outlier? 2022, 2019, 2018 and 2014 – Deep Bear Markets.
Joining them in 2025. BTC has fallen 23% since the beginning of October. If Bitcoin stays at current levels, this will be its worst quarter in seven years.
liquidity void
The $19 billion liquidation cascade that occurred on October 10 — causing BTC to plummet from $122,500 to $107,000 in a matter of hours, with other cryptocurrencies suffering much larger losses — caused damage in more ways than one. Many believed that institutionalization through ETFs would insulate cryptocurrencies from such pullbacks, but in reality, it shows that a market historically dominated by speculative mania has not changed, just transformed into a new form.
Two months on, not only have liquidity and market depth failed to recover from the selloff, but it has also shattered the confidence of investors, who are now wary of any form of leverage.
Bitcoin hit a local low of $80,500 on November 21, before bouncing back to relative safety before reaching a high of $94,500 on December 9. But open interest continued to trend downward during this period, falling from $30 billion to $28 billion, according to Coinalyze.
This suggests that the recent price increase can be attributed to short position unwinding rather than true buyer demand, a scenario that is unimaginable to many steeped in the 2025 Trump, ETF, and DAT narrative.
What are the catalysts for 2026?
Bitcoin and the broader cryptocurrency market have lagged stocks and precious metals since the outbreak began in October; the Nasdaq Composite has gained 5.6% since October 12, while gold has gained 6.2% over the same period, while Bitcoin has fallen 21%.
This extremely poor performance suggests two things: the 2025 catalysts didn’t live up to expectations, and the 2026 catalysts simply don’t exist.
Trump season is in full swing at the start of the year, with easing regulations around cryptocurrencies and U.S. Bitcoin strategies gaining traction, while spot ETF flows continue to break records.
But that excitement has waned, and one of the only bullish catalysts now is a rate-cutting cycle, which is seen as having a positive impact on risk assets like Bitcoin. The Fed cut interest rates in September, October and December, but Bitcoin has only lost 24% in value since the September meeting.
While Bitcoin bulls are starting to grasp at straws at potential bullish catalysts, agnostics can see the warning signs. DAT has a large investment in cryptocurrencies at the top, with some financial firms’ mNAV now falling below 1. CoinShares said in early December that the DAT bubble had burst in many ways.
This could lead to significant ramifications for the cryptocurrency market, as some companies may be forced to liquidate their holdings into a market that lacks any liquidity to deal with selling pressure.
Even Strategy (MSTR) CEO Phong Le recently hinted that the company might sell BTC if mNAV falls below 1.0, but it’s worth noting that the tech firm is still raising billions of dollars to buy BTC, so this is still a worst-case scenario.
All of this has a bullish bias, as when these companies start to fail, it can be a good time to buy, as seen in the 2022 bear market following the collapse of Celsius, Three Arrows Capital, and FTX.
