Recent volatility in Bitcoin, marked by market pullbacks, is widely seen as a sign of selling pressure, but underlying data suggests otherwise. On-chain metrics indicate little evidence of widespread selling by holders, meaning these dips aren’t driven by investors exiting their positions. Instead, the price weakness appears to stem from market structure issues.
Why Structural Weakness Is Often Temporary
These Bitcoin dips aren’t caused by selling pressure but by stablecoin-denominated short positions. Sweep, co-founder of GlydeGG, explained on X that when significant leverage enters the market via dollars or stablecoins, market makers don’t simply let the price move. Their role requires neutrality, which they maintain by selling spot Bitcoin—not out of bearish sentiment, but to balance their books. As a result, the price drops without the fear, panic, or actual spot selling that typically accompanies downturns.
The U.S. doesn’t need to sell assets to sway global markets; it exports dollars. Those dollars become leverage, which creates synthetic pressure, forcing hedging activities that ultimately impact spot markets. This cycle explains why recent sell-offs feel hollow—retail investors have largely stepped back. Currently, the market is rebalancing within a system priced against a weakening currency, with all markets now denominated in a currency losing purchasing power. That’s why volatility increases even when market conviction remains unchanged.
This isn’t a bear market; it’s a clearing of liquidity providers (LPs), allowing large players to buy Bitcoin cheaply without directly owning it.
How Bitcoin Supply Dynamics Are Entering a New Phase
An ambassador and partner of Wolfswapdotapp, Crypto Miners, has noted that Bitcoin’s supply dynamics are shifting rapidly. According to K33 Research, nearly $300 billion worth of previously dormant BTC re-entered circulation in 2025. This supply release has been driven by long-term holder sales, large over-the-counter (OTC) transactions, and absorption by ETFs, marking one of the largest supply unlocks in Bitcoin’s history.
On-chain data from CryptoQuant shows that long-term holder distribution over the past 30 days has reached its highest level in over five years. Simultaneously, selling pressure currently outweighs demand as ETF flows turn negative and retail participation weakens.
Despite near-term fragility, K33 points out that this distribution phase may be nearing exhaustion. Early holder selling is expected to fade by early 2026, potentially setting the stage for renewed accumulation as institutional rebalancing stabilizes supply. For now, markets remain sensitive, but structurally, this appears to be a late-cycle supply redistribution rather than panic selling.
Frequently Asked Questions
FAQs Bitcoin Dips Market Structure
BeginnerLevel Questions
1 What does market structure issue mean in simple terms
It means the main problem isnt that a huge number of people are panicselling Bitcoin Instead the drop is being driven by the way the trading market itself is set uplike a lack of strong buy orders at certain prices or too much leverage in the systemwhich can cause exaggerated price swings
2 If people arent massively selling why does the price go down
The price can fall sharply even without massive selling if there arent enough willing buyers at current prices to absorb normal selling Think of it like an auction where only a few people are bidding prices can drop quickly even if only a few items are for sale
3 Whats the difference between selling pressure and a market structure issue
Selling Pressure Many holders actively decide to sell their Bitcoin directly pushing the price down
Market Structure Issue The trading environment is fragile Normal or even modest selling can trigger a cascade of automated trades that crash the price
4 Is this a sign that Bitcoin is failing
Not necessarily These dips often highlight inefficiencies or growing pains in the relatively young and evolving cryptocurrency market infrastructure not a fundamental flaw in Bitcoin itself
Intermediate Advanced Questions
5 What specific market structure problems cause these dips
Key issues include
Liquidity Gaps Large gaps between buy orders on exchanges so prices slip down quickly to find the next buyer
Leverage Liquidations When traders using borrowed money get automatically sold out of their positions due to a small drop creating a domino effect of forced selling
Derivatives Dominance The futures and options markets can have an outsized influence on the spot price especially around key expiry dates
6 Can you give an example of a leverage liquidation cascade
Imagine many traders have leveraged long positions that get liquidated if Bitcoin hits 60000 When the price nears that level their forced sales push the price to 59500 This triggers the next batch of liquidations set at 59500 pushing the price down further in a selfreinforcing cycle unrelated to longterm investor sentiment