Bitcoin's Dominance Under Pressure: Are ETFs and Stablecoins Losing Their Edge?

The cryptocurrency market is at an inflection point. What once propelled Bitcoin to record highs is now becoming a headwind, according to NYDIG’s research director Greg Cipolaro. The narrative surrounding Bitcoin’s rise has shifted dramatically—from a story of institutional adoption to one of market correction and liquidity rebalancing.

From Tailwind to Headwind: How ETFs Changed the Game

Spot Bitcoin ETFs were celebrated as the breakthrough moment of this cycle. Consistent inflows into these products, paired with high DAT premiums and expanding stablecoin supplies, created a powerful demand engine that lifted Bitcoin higher. Yet the October liquidation cascade reversed this dynamic entirely. The sudden spike in DAT premium compression coincided with stablecoin withdrawal and an ETF fund reversal, signaling a critical shift in market structure.

Today, Bitcoin trades at $93.11K with a 24-hour decline of 2.06%, even as broader market narratives attempt to justify further gains. The phenomenon reflects a deeper issue: when the mechanical sources of demand dry up, price discovery becomes precarious.

Bitcoin Dominance Tells the Real Story

Perhaps the most telling metric is Bitcoin’s dominance, which has compressed from 60% in early November to approximately 56.47% currently. This decline is not arbitrary—it signals capital rotation away from the market’s most mature asset. Historically, when bitcoin dominance rises during pullbacks, funds flow back to the safest harbor. The reverse is now occurring: dominance is eroding as liquidity conditions tighten.

Cipolaro explains that DAT and stablecoins were once the primary demand drivers for Bitcoin purchases. With DAT premiums compressing and stablecoin supplies contracting, the mechanical bid has evaporated. The margin of safety within the DAT ecosystem still exists—there are no immediate signs of financial distress—but the trend is unmistakable: investors are extracting liquidity at precisely the moment Bitcoin needs it most.

Long-Term Tailwinds Remain Intact

Despite the near-term headwinds, Cipolaro maintains a constructive long-term outlook. Institutional appetite for Bitcoin continues to solidify, sovereign interest is climbing, and the asset’s role in global finance appears entrenched. These structural developments suggest Bitcoin’s bull thesis remains valid across longer time horizons.

However, cyclical pressures are intensifying. Market participants should prepare for the possibility that recent pullbacks deepen further. Macro conditions, global liquidity, and geopolitical developments will ultimately determine whether current weakness resolves quickly or evolves into a more sustained correction. The path forward is uncertain, and caution remains warranted.