Bitcoin market stabilizes as macro pressure and regulation reshape cycle

The bitcoin market is enduring a sharp cooldown, yet on-chain data and macro signals suggest a shift from panic to consolidation rather than a full-blown breakdown.

Is the current bitcoin market drawdown signalling a base formation?

Bitcoin has now recorded its third-largest drawdown of the current cycle, dropping 25 percent from its all-time high to trade below $94,000. Momentum on lower timeframes still points to the downside. However, the pace of selling and the size of realised losses are starting to stabilise, hinting that this phase may be more about digestion than forced capitulation.

Price is now trading solidly beneath the short-term holders7 (STH) cost basis at $111,900, as well as the 61 standard-deviation band near $97,500. Until this key area is reclaimed, downside risks remain present. That said, several on-chain exhaustion signals are emerging, suggesting selling pressure from recent buyers is becoming depleted even as price hovers near local lows.

The STH Realised Profit-Loss Ratio has slipped below 0.20, implying more than 80 percent of coins moved on-chain are being sold at a loss. Historically, this zone has aligned with local bottoms, when marginal sellers are largely flushed out. Moreover, STH supply in profit has collapsed to just 7.6 percent, levels last witnessed near prior cycle troughs, underscoring how few recent entrants remain in the green.

While more confirmation is still required via renewed spot demand and derivative positioning, the combination of depressed STH profitability and deeply negative realised flows often precedes base building. This phase tends to play out more in terms of time than price. As a result, the market could gravitate toward a slower stabilisation pattern into late Q4 rather than another violent leg lower.

How is the macro economic backdrop evolving into late 2025?

The United States enters late 2025 with a noticeably softer macroeconomic backdrop. The 43-day government shutdown has ended, but it left material economic scars, including an estimated $701$14 billion in permanent GDP losses. In addition, furloughed workers experienced acute liquidity stress, and investors now face renewed concerns over fiscal brinkmanship ahead of another funding deadline in January.

Financial markets initially shrugged off the disruption. However, sentiment deteriorated rapidly once the shutdown ended, as the longer-term damage became clearer. The S&P 500 has since pulled back while investors reassess fiscal risks, the sustainability of deficit spending, and the likelihood that the Federal Reserve opts for a more cautious pause rather than a swift pivot to rate cuts.

At the same time, domestic business sentiment is cooling. The NFIB Small Business Optimism Index declined in October, reflecting weaker sales, tighter profit margins, and persistent labour shortages. Moreover, this deterioration aligns with weakening external demand. The Global PMI New Export Orders Index fell to 48.5, its fastest contraction in nearly two years, with both manufacturing and services sectors showing broad-based declines.

Inflation dynamics add another layer of pressure. With official CPI releases delayed during the shutdown, investors turned to alternative gauges. New York Fed inflation expectations sit around 3.2 percent, while market-based breakevens hover near 2.2 percent. Together with heavy fiscal spending, these readings suggest the Fed may keep policy rates higher for longer, a stance that keeps mortgage rates above 6 percent and leaves households with limited relief.

What does the new US crypto regulation blueprint change for digital assets?

US digital-asset policy took a significant step forward this week as a bipartisan Senate draft bill proposed shifting primary oversight of cryptocurrencies from the SEC to the CFTC. The text would classify most tokens as 2digital commodities and require exchanges and custodians to register under a commodities-style framework. However, the proposal still leaves major questions around DeFi treatment, AML rules, and coordination between agencies.

This draft arrives after years of tension over the appropriate regulatory perimeter for crypto assets. If implemented, it could provide more clarity for trading platforms and institutional participants that have been seeking a dedicated market structure regime. For a detailed breakdown of the bill9s mechanics and political path, see this overview from Bloombergs coverage of the Senate proposal, which highlights how funding and supervision might shift toward the CFTC.

How is Web3 pushing deeper into sports and entertainment?

Crypto continued to expand into mainstream entertainment as TKO Group Holdings, the parent company of the UFC, announced a multiyear partnership with Polymarket. Starting in 2026, real-time prediction-market data will be integrated directly into live fight broadcasts, reflecting fan expectations round by round and adding a new layer of interactive engagement.

The agreement positions UFC and Zuffa Boxing as early movers in embedding prediction tools into the live sports experience. According to the official announcement on UFCs partnership page, Polymarket will power new on-screen metrics that visualise global fan sentiment. This evolution points to a broader trend where Web3 prediction infrastructure and tokenised incentives converge with traditional sports broadcasting.

Why does the Czech central bank’s bitcoin pilot matter?

Meanwhile in Europe, the Czech National Bank launched a $1 million pilot portfolio that includes Bitcoin, a stablecoin, and a tokenised deposit. This marks its first direct exposure to digital assets. Officially framed as a technical experiment, the initiative underscores rising central-bank interest in understanding how blockchain-based instruments might shape future financial infrastructure.

The pilot is modest in size relative to the CNBs broader balance sheet. However, it is symbolically important as it places a leading European monetary authority directly in contact with live crypto instruments. For additional context on the structure and objectives of this portfolio, see the coverage by CoinDesk on the CNBs digital asset experiment, which details the composition and risk parameters.

For the wider ecosystem, this move reflects a growing acknowledgement that tokenised deposits, stablecoins, and non-sovereign assets can coexist within a regulated financial architecture. Moreover, it suggests that future monetary-policy tools and payment systems may increasingly be designed with interoperability across traditional and distributed ledgers in mind.

What could this confluence mean for the bitcoin market into late Q4?

Taken together, the on-chain capitulation signals, softer macro conditions, evolving US regulation, and experimental central-bank activity paint a nuanced picture for the flagship cryptocurrency. In the near term, price remains below critical STH cost levels, and volatility could persist. However, the data backdrop points toward an environment where accumulation and time-based base building become more likely than deep, extended capitulation.

As late Q4 approaches, investors are watching for renewed demand inflows, clearer monetary-policy guidance, and further regulatory visibility. If these catalysts materialise alongside stabilising realised-loss metrics, the current phase could be remembered as a consolidation window in the broader cycle, rather than its terminal breakdown for the bitcoin market.