The Bitcoin and crypto market have struggled to build momentum this week, even though several major economic factors should have given it a boost. Specifically, the Federal Reserve’s latest 25-bps rate cut, improving trade relations between the U.S. and China, and the plan to end quantitative tightening (QT) in December have all created a favorable backdrop. Yet, crypto continues to slip, with traders wondering why the market remains weak.
Bitcoin and Crypto Down Despite Macro Tailwinds
For context, the total crypto market cap has dropped from $3.9 trillion on Oct. 27 to about $3.66 trillion, erasing roughly $240 billion in four days.
Amid this collapse, Bitcoin (BTC) has fallen nearly 4% since Oct. 27, struggling to stay above $110,000 and now trading around $109,983. Ethereum (ETH) has lost more ground, dropping over 9% in the same period to about $3,850.
As investors question why the improving macro conditions are not leading to positive market reactions, analyst Miles Deutscher presented three possible reasons behind the weakness.
Deutscher Spots 3 Factors Behind Market Weakness
First, he explained that a Digital Asset Treasury (DAT) unwind has created pressure on both Bitcoin and Ethereum. Notably, this is because some treasuries are trying to protect their net asset values. While major holders like Strategy are unlikely to sell, smaller DATs have added strain to the market.
Secondly, he pointed out that demand for crypto ETFs has weakened, with several weeks of net outflows cutting into institutional buying power. For context, over the past two days, Bitcoin ETFs have lost $959 million, while Ethereum ETFs have seen outflows worth $265.75 million.
For the third factor, Deutscher highlighted the fallout from October 10. Notably, the market crash on that day caused lasting damage to market sentiment and liquidity. He noted that the event hurt confidence after crypto had already underperformed compared to stocks.
Notably, market makers are still untangling positions from that episode, and its full effect may not yet be clear. Meanwhile, retail investors have largely stepped back, discouraged by price swings and prolonged stagnation.
Despite the weak performance, Deutscher believes one strong Bitcoin rally could flip the market’s mood. He argued that Bitcoin often moves without a clear trigger, behaving more like a macro asset. As stock markets set new highs, he said a Bitcoin “catch-up rally” could still happen and possibly take prices to new record levels before the cycle ends.
XWIN Group Analysts Provide Additional Reasons
Meanwhile, XWIN Group analysts shared additional data in a recent CryptoQuant report. They noted that even the approval of an altcoin staking ETF briefly lifted spirits but failed to stop the decline in both Bitcoin and U.S. equities.
They noted that another reason behind the weakness is fading institutional demand. For context has flipped negative again, indicating that U.S. buying activity has weakened.
The analysts also highlighted comments from Fed Chair Jerome Powell as a major factor. While he confirmed that QT will end on Dec. 1, he made it clear that another rate cut in December isn’t guaranteed.
Moreover, geopolitical tensions have added more uncertainty. Although Washington and Beijing described their talks as successful, insiders called the outcome only a temporary truce. Friction over Taiwan remains, and reports of renewed U.S. nuclear testing have unsettled global sentiment.
The analysts agree that the sell-off makes sense given the current mix of cooling momentum, reduced institutional participation, and unclear monetary direction. However, they see a brighter outlook ahead. Once QT ends in December, they expect liquidity to improve and investor appetite for risk to return by early 2026.