Bitcoin (BTC) is currently holding below the key $70,000 level. Still, a new report from data and research firm Ecoinometrics suggests that the market may not be building a base for recovery.
Instead, the firm argues that the cryptocurrency remains vulnerable to another downward move, driven by three overlapping forces: weakening equity momentum, structural changes in Bitcoin’s volatility profile, and a Federal Reserve (Fed) that is steady but not supportive.
Structural Headwinds For Bitcoin
According to the report, Bitcoin no longer trades in isolation. It has become increasingly linked to equity markets, capital flows, and broader macroeconomic conditions. At the moment, that linkage is not working in its favor.
Bitcoin is already showing signs of weakness, equity markets are losing steam, and the Federal Reserve is maintaining a neutral stance that offers little additional liquidity support. Together, those factors keep downside risks elevated.
While Bitcoin has attempted to stabilize in recent weeks, Ecoinometrics cautions that this does not resemble a clear bottoming pattern. Rather, it looks more like a pause within an ongoing bear phase.
Structural headwinds are already in place, as highlighted by the firm, including continued outflows from Bitcoin exchange-traded funds (ETFs) and a broader “risk-off” environment in financial markets.
The report noted that Bitcoin is trading below its long-term trend, with its 200-day moving average (currently above $100,000) turning downward and rallies repeatedly failing beneath that level — a classic sign of a bearish structure.
By contrast, the Nasdaq 100 has stalled for roughly three months, but its 200-day moving average is still rising. That suggests equities are slowing but have not yet entered a confirmed structural downturn.
The distinction is important. When Bitcoin weakens on its own, declines can unfold gradually. However, history shows that when equities roll over decisively, Bitcoin tends to fall sharply alongside them.
Lower Volatility, Higher Correlation
Beyond price action, the firm highlights a deeper structural shift in Bitcoin’s behavior: a marked compression in volatility. In prior cycles, 12-month realized volatility surged dramatically during both bull markets and subsequent crashes.
This time, even after a full bear-bull-bear sequence since 2022, volatility has not returned to those previous extremes. In fact, peak volatility in the current cycle has been materially lower.
This change reflects who is driving demand. ETF flows now play a dominant role in shaping trends. These flows are typically larger, steadier, and more systematic than the retail-driven surges that characterized earlier cycles.
Bitcoin, in other words, has become embedded within institutional portfolios, often sitting alongside technology and growth stocks. That shift brings advantages, including lower volatility and more predictable flow patterns. It may also strengthen Bitcoin’s long-term durability.
However, it comes with a trade-off: deeper sensitivity to equity market drawdowns. Ecoinometrics asserts that as BTC becomes more integrated into the broader risk-on complex, it behaves more like a component of that system rather than a detached speculative asset.
Downside Risks Grow
On the policy front, Ecoinometrics suggests the Fed’s posture remains largely unchanged: inflation has improved but is not fully contained, and the labor market remains resilient.
As a result, rate cuts are not urgent, and rate hikes are not imminent. The communications index sits well below the tightening peak seen in 2022 and far above the crisis-level dovishness of 2020, placing current policy in the middle ground.
For Bitcoin, that steady stance removes the risk of a sudden policy shock, but it does not provide a tailwind. The firm said in a fragile market, stability may be preferable to tightening, yet it offers little support if risk assets begin to slide.
Featured image from OpenArt, chart from TradingView.com
