Behind the Virtual Currency Crash: Funds Flowing into Safe-Haven Assets, Bitcoin Technicals Signal a Warning

During weekend trading, Bitcoin hovers around $93,000, with a 24-hour increase of only 2.25%. Despite a recent slight rebound, the overall trend remains fragile. Against the backdrop of a major cryptocurrency decline, other mainstream digital assets are also under pressure: Ethereum rises 0.67% to $3,160, XRP gains 2.77%, Solana drops 0.53%, and Dogecoin falls 3.04%. The deeper reason for this correction is not inherent to the crypto market itself but is driven by a large-scale rotation of market funds.

Changes in Capital Flows: From Risk Assets to Safe-Haven Choices

According to the latest research from ICAP’s technical analysis team, investors are making clear asset allocation adjustments. Since reaching a historic high of $126,080 in October, Bitcoin has fallen more than one-third, while gold has risen about 15% and hit a new all-time high, with silver increasing by 50%. This contrasting capital flow is no coincidence.

The analysis indicates: “Funds are flowing out of Bitcoin and into gold and silver.” This reflects a market reassessment of risk assets. When macroeconomic uncertainty rises, traditional safe-haven assets quickly become more attractive, while Bitcoin, widely regarded as a risk asset, faces capital outflows.

December data further confirms this trend. Bitcoin ETFs recorded over $140 million in net outflows, indicating that institutional investors’ enthusiasm for Bitcoin allocation has significantly decreased toward year-end. Meanwhile, open interest in futures contracts has risen above $28 billion, but this growth mainly results from the accumulation of short positions rather than new long entries, further reinforcing institutional caution.

Macro Environment Pressure: Central Bank Policies Increasing Uncertainty

As 2025 approaches, the macro environment’s support for cryptocurrencies weakens noticeably. The policy signals from major central banks like the Federal Reserve are mixed, causing market uncertainty about future interest rate paths. Additionally, year-end trading tends to be light, with overall liquidity tightening, which puts pressure on all risk assets.

On the demand side, the cryptocurrency market shows a clear decline in attractiveness. The Crypto Fear & Greed Index hovers around 27, in the deep “fear” zone, with no signs of recovery. As long as this index cannot rebound to a “neutral” level, market confidence will remain fragile, and the downward trend in cryptocurrencies is likely to continue.

Technical Warning: Bearish Structures Still Dominant

From a technical perspective, warning signs for Bitcoin have already appeared. The long-term downtrend line from the all-time high remains a key resistance level. Although recent attempts by bulls to rebound have occurred, they have not been strong enough to break through this resistance.

The RSI indicator remains on a downward slope, with readings below 50, indicating that the average momentum over the past two weeks still favors sellers. If this continues, short-term selling pressure will intensify. The MACD histogram is gradually approaching zero; a sustained crossing into negative territory would signal that short-term moving averages are in a bearish state, reinforcing the view that Bitcoin is weakening in the short term.

Key price levels include $92,292 as an important resistance, aligning with the long-term downtrend line and the 50-period simple moving average. A sustained breakout and stabilization above this level could weaken the bearish structure. The near-term support is at $85,430, corresponding to recent weekly lows. The main support is at $80,413, close to the 2025 lows and a key psychological level. Falling below this could trigger a stronger bearish pattern.

Abnormal Volatility and Liquidity Risks

It is worth noting that Bitcoin has experienced extreme volatility on certain trading pairs. On some stablecoin pairs, prices once plunged sharply to $24,111, only to quickly rebound within seconds to above $87,000. Such sudden swings are usually caused by low liquidity or abnormal price displays, rather than systemic market crashes. Newly issued or low-volume stablecoin pairs often have limited market makers and wide bid-ask spreads, with insufficient order book depth. A large market sell order or forced liquidation can rapidly wipe out buy orders, causing the transaction price to momentarily fall far below the true market level.

While these events appear extreme on charts, traders generally view them as microstructure issues rather than trend reversals. Nonetheless, they serve as a reminder that trading in low-liquidity pairs carries significant risks.

Outlook: Capital Outflows and Bearish Dominance Likely to Persist

Based on the above analysis, the downward trend in cryptocurrencies is unlikely to reverse in the short term. As long as capital continues to flow out, short positions increase, and central bank policies remain uncertain, Bitcoin is likely to face ongoing selling pressure toward the end of the year. Institutional indicators continue to show a lack of stable, sustained allocation interest in Bitcoin, deeply embedded in its short-term structural weakness.

To change this situation, one of the following must occur: a genuine emergence of new demand, a significant improvement in market sentiment, or a clear macroeconomic turnaround. Until then, patience and cautious observation remain the prudent approach.