$350B wiped out – but heavyweight Bitcoin buyers are quietly loading up
The crypto market has been stuck in a painful drawdown, but under the surface, some of the biggest Bitcoin buyers are taking the other side of the trade.
After months of relentless selling and outflows, data now suggests that Bitcoin’s period of intense pressure may be starting to cool. While prices remain under strain, the behavior of large, sophisticated investors tells a more nuanced story.
$350 billion in unrealized losses – and counting
Across the wider digital asset market, unrealized losses have ballooned to around $350 billion. Of that, roughly $85 billion is attributable to Bitcoin holders alone, according to on‑chain analytics estimates.
Such deep paper losses typically signal two things at once: heavy capitulation by weaker hands and growing stress among long‑term holders. At the same time, historical cycles show that when unrealized losses reach extreme levels, markets often transition into highly volatile, opportunity‑rich phases. Analysts expect Bitcoin to be no exception, with choppy price swings likely before a clear trend is established.
Digital Asset Treasuries step into the volatility
Instead of backing away from the turmoil, Digital Asset Treasuries (DATs) appear to be using the current weakness as a strategic entry point. These entities – which include structured funds, corporate treasuries, and specialized digital asset vehicles – have been steadily increasing their Bitcoin exposure.
Recent data shows that DATs have been accumulating Bitcoin in a consistent, measured fashion, indicating a deliberate repositioning rather than short‑term speculation. Net treasury flows have moved higher since the start of the fourth quarter, with daily buying activity approaching 24,000 BTC at times.
In total, DATs now hold more than 1.69 million BTC, a stash that represents about 8.03% of the entire circulating supply. At current market prices, that hoard is valued near $153.4 billion – a sizable vote of confidence in Bitcoin’s long‑term relevance from capital allocators who typically plan years ahead, not weeks.
Stronger accumulation than late 2024 – despite bearish sentiment
What makes this accumulation wave especially notable is its timing. Compared with the fourth quarter of 2024, current buying by DATs is measurably stronger, even though overall market sentiment is more pessimistic.
Back in December 2024, Bitcoin burst through the psychologically important $100,000 level for the first time, triggering euphoria and aggressive retail participation. Today’s environment is very different: sentiment is cautious, macro uncertainty is elevated, and headlines are dominated by losses rather than gains.
Yet, despite the gloomier mood, institutional‑style buyers are adding more, not less. Sustained accumulation at this scale tends to act as a structural support for prices and can help Bitcoin defend key zones such as the $90,000 region, even when short‑term selling remains intense.
Spot Bitcoin ETFs: Institutions are not retreating
Alongside DATs, U.S. spot Bitcoin exchange‑traded funds continue to expand their holdings. By the end of the most recent trading week, these ETFs had purchased approximately $233.7 million worth of Bitcoin.
Over the past week, total net inflows reached about $286.6 million. That figure reflects $424.5 million in gross ETF buying, partially offset by $137.9 million in redemptions and sales. Despite some investors cashing out, fresh demand still clearly outweighs exits.
Trading activity in Bitcoin remains elevated, with total volume around $124.15 billion. When buy volume persistently outstrips sell volume in such a liquid environment, it usually signals that market participants are gradually regaining confidence, even if price action still looks choppy on shorter timeframes.
A mixed but improving sentiment picture
Not all indicators are flashing green. One of the more cautious signals comes from the Fund Market Premium, which currently shows a negative reading. This means some ETFs are trading at a discount to their underlying net asset value, hinting that short‑term momentum is subdued and that demand is not yet strong enough to push fund prices above their Bitcoin backing.
However, the fact that investors keep allocating capital into these ETF products despite the lack of a premium suggests a baseline level of conviction. In other words, institutions seem less focused on tactical trading and more interested in building long‑term exposure while prices remain under pressure.
This combination – soft near‑term momentum, but ongoing accumulation by well‑capitalized players – is typical of transitional phases where markets move from capitulation toward stabilization.
Rising global liquidity: A powerful macro tailwind
Beyond crypto‑specific metrics, macroeconomic conditions have quietly shifted in Bitcoin’s favor. Global M2 – a broad measure of money supply that includes cash and easily accessible deposits – has recently climbed to an all‑time high of roughly $130 trillion.
When global M2 rises, it usually reflects more abundant liquidity in the financial system. Central banks, either explicitly or indirectly, are loosening financial conditions, making credit cheaper and capital more available. Historically, such environments have been supportive of so‑called “risk assets” – equities, high‑yield credit, and increasingly, digital assets like Bitcoin.
As global liquidity expands, a portion of this capital often rotates into higher‑risk, higher‑beta assets in search of returns that exceed those available in bonds or savings accounts. Bitcoin, with its fixed supply and growing institutional infrastructure, stands as a prime candidate to benefit from this rotation.
U.S. policy: From headwind to cautious support
In the United States, the shift in sentiment is already visible in monetary policy. The Federal Open Market Committee recently cut its benchmark interest rate by 25 basis points. Even a relatively modest reduction in rates can have outsized signaling impact: lower borrowing costs make leverage cheaper, ease pressure on highly indebted sectors, and typically encourage more risk‑taking across financial markets.
Historically, Bitcoin has tended to perform better in environments where real interest rates are falling or remain low. The latest move from the Federal Reserve, while not an aggressive easing cycle, nudges policy in a direction that has often coincided with stronger performance from cryptocurrencies.
If the rate‑cutting path continues or even pauses at relatively accommodative levels, it could reinforce the capital rotation narrative, with more investors willing to allocate to Bitcoin as part of a broader risk‑on stance.
Why institutions may be buying into weakness
The behavior of DATs and ETF investors raises a key question: why are large players accumulating while the broader market is nursing such heavy losses?
Several factors likely explain this:
1. Long‑term thesis intact: For many institutions, Bitcoin’s core investment narrative – digital scarcity, independence from traditional monetary policy, and growing integration into regulated markets – has not fundamentally changed, even if prices have.
2. Attractive entry valuations: After sizeable drawdowns and $350 billion in unrealized losses, valuations may look considerably more attractive on multi‑year horizons.
3. Portfolio diversification: Allocators increasingly view Bitcoin as a diversifier or an asymmetric bet rather than a short‑term trading instrument. Periods of distress often create opportunities to build positions that would be too expensive during euphoric phases.
4. Structural infrastructure growth: The presence of spot ETFs, professional custodians, and clearer regulatory frameworks in major jurisdictions lowers operational and compliance barriers for large investors, making it easier to step in during downturns.
Taken together, these dynamics help explain why smart money appears to be slowly positioning itself for the next phase of the cycle, even as retail sentiment remains muted.
What retail and smaller investors should watch
For individual market participants, the current environment is complex. Volatility is likely to remain elevated, and the risk of further downside cannot be dismissed. However, several indicators are worth monitoring:
– Treasury and ETF flows: Continued net inflows into DATs and spot ETFs would support the case for a medium‑term floor forming in Bitcoin’s price.
– Discounts or premiums on funds: A shift from negative to neutral or positive fund premiums could signal improving short‑term momentum and stronger demand.
– Liquidity trends and rate policy: Ongoing increases in global M2 or further rate cuts in major economies would typically bolster the backdrop for Bitcoin and other risk assets.
– Price reaction to bad news: If Bitcoin starts to hold or even rise on negative headlines, it often indicates sellers are exhausted and buyers are quietly absorbing supply.
None of these are guarantees of future performance, but together they can help build a more informed view of where the market might be heading.
Potential scenarios for the coming months
Looking ahead, several broad scenarios appear plausible:
1. Choppy accumulation range: Bitcoin could spend an extended period oscillating around key levels such as $90,000, with institutional buying offsetting ongoing retail selling. This would resemble a “base building” phase.
2. Sharp volatility spikes: With so many unrealized losses still on the books, sudden moves – both up and down – are likely as leveraged players are liquidated or as large buyers aggressively step in.
3. Renewed uptrend if inflows accelerate: Should ETF and treasury inflows strengthen alongside continued global liquidity growth, Bitcoin could resume a more decisive upward trajectory.
4. Deeper correction if macro deteriorates: Conversely, a surprise tightening of financial conditions, renewed inflation fears, or a sharp risk‑off event in traditional markets could drag Bitcoin lower, even in the face of institutional buying.
Investors need to be prepared for any of these paths and manage their risk accordingly.
Final thoughts
The headline numbers are stark: $350 billion in unrealized crypto losses and $85 billion tied to Bitcoin alone. Yet behind this painful surface, some of the market’s largest and most sophisticated participants are methodically increasing their exposure.
Digital Asset Treasuries now control more than 1.69 million BTC, spot Bitcoin ETFs continue to record net inflows, and global liquidity is sitting at record highs. Meanwhile, a newly more accommodative U.S. interest rate environment adds another macro layer that has often favored Bitcoin in past cycles.
This backdrop does not eliminate risk. Bitcoin remains a highly volatile asset, and further drawdowns are entirely possible. But it does suggest that, while many are focused on recent losses, deep‑pocketed buyers are positioning for what they believe comes next.
Nothing in this analysis should be taken as financial or investment advice. Trading, buying, or selling cryptocurrencies involves significant risk, and every participant should conduct thorough, independent research and carefully assess their own risk tolerance before making any decisions.