Bitcoin sheds $716B since ATH – Here’s what’s weighing on BTC

Bitcoin has been navigating one of its most challenging phases yet. Since its market capitalization peaked at an all-time high of $2.486 trillion, the asset has shed approximately $716 billion.

Bitcoin’s market capitalization stood at $1.77 trillion as of press time, according to CoinMarketCap.

A drawdown of 28.8% at this scale does not occur in isolation.

With Bitcoin [BTC] trading around $88,900 at the time of writing, multiple factors have contributed to the decline. AMBCrypto examined the forces weighing on Bitcoin’s performance and what could shape its next move.

Capital inflow weakens after 2.5 years

Bitcoin’s recent price weakness has been driven largely by capital exiting the market. While this may appear straightforward, on-chain data highlighted a more nuanced shift.

For the first time in over two years and six months, capital inflows have begun to weaken, as realized capitalization has stalled during this period.

The Profit and Loss (PnL) Index Signal identified this trend by combining several metrics based on the 365-day moving average to determine whether the market is undervalued or overvalued.

Source: CryptoQuant

In context, Realized Capitalization has remained flat for nearly a month, reflecting a pause in fresh capital entering the market as investors gradually pull out.

Ki Young Ju, Founder of CryptoQuant, noted that periods like this often require time to stabilize, as recovery depends on the return of new capital.

“Sentiment recovery might take a few months,” he said.

With more than $700 billion having exited the market and limited inflows replacing it, Bitcoin’s overall price structure remains fragile. Under normal conditions, this setup would increase the likelihood of price stagnation or further downside.

Does this spell doom?

Despite the liquidity slowdown sending a bearish signal, price action has not broken down sharply.

Spot market data over the past three months showed that buyer activity outweighed selling pressure. The Bitcoin Spot Taker Buy–Sell Cumulative Volume Delta indicated that investors remain in an accumulation phase, suggesting that retail participants are still active in the market.

Source: CryptoQuant

This behavior offers a possible explanation for Bitcoin’s ability to hold its range despite weakening capital inflows.

The Spot market reinforces this trend.

Since December, investors have continued to accumulate Bitcoin. Between the week ending the 1st of December and the week ending the 15th, total Spot purchases reached approximately $3.12 billion.

When selling pressure is absorbed despite dominant bearish sentiment, it limits the extent to which prices decline.

Bitcoin remains structurally constrained

Market analyst David attributed Bitcoin’s price behavior largely to options traders hedging their positions rather than shifts in sentiment.

The analysis showed that call and put options clustered around $90,000 and $85,000 have effectively trapped Bitcoin within a narrow trading range. These positions create a positive gamma environment that mechanically restricts price movement.

In practical terms, whenever Bitcoin approaches the $90,000 level, market makers face a sell wall of roughly $40.7 million.

Conversely, when the price drops toward the $85,000 region, buy orders totaling about $80 million emerge. This dynamic creates a gamma effect that keeps the price oscillating within defined boundaries.

Source: X

This confirmed that Bitcoin’s recent range-bound movement is driven by market structure rather than investor sentiment.

An estimated $278 million—representing 54% of total market gamma—is set to expire on the 26th of December ,aligning with the expiration of $23 billion in options contracts.

Once this gamma expires, Bitcoin is likely to return to sentiment-driven pricing. If bullish pressure remains dominant, as reflected in Spot volume trends, the conditions could support a potential rebound as true price discovery resumes.