The price volatility of Bitcoin is highly correlated with the capital movements of its spot ETF or ETP. Two weeks ago, the crypto market was thriving, with Coinshares data showing that global crypto asset investment products attracted $308 million in inflows in a single week. However, following the Fed's hawkish comments on December 19, there was a significant outflow of $576 million, with total outflows over the weekend reaching $1 billion.

Additionally, influenced by the recent price drop, the total value of assets managed by crypto exchange-traded products (ETPs) has decreased by $17.7 billion, indicating a significant outflow of funds. By this week's Christmas trading situation, Bitcoin experienced some outflow during the week but ultimately achieved a net inflow of $375 million against the trend, reflecting that market sentiment is not as pessimistic as it seems. In contrast, the outflow from multi-asset investment products was most pronounced, reaching $121 million.

The progress of this bull market has not yet reached its end.

"Halving" has always been a key event in the Bitcoin market, representing a technical node where block rewards decrease and serves as an important catalyst for market sentiment and capital flow. Historical price trends starting from halving day indicate that there are significant differences in market performance across different halving cycles, reflecting the trajectory of market maturation and the complex interplay of supply-demand dynamics and market expectations. During the first halving cycle, Bitcoin's price increased by 5315%, with a maximum drawdown of 85%; the second halving cycle saw a growth of 1336% with a maximum drawdown of 83%; and the third halving cycle experienced a slowdown in growth to 569%, with a reduced maximum drawdown of 77%.

This gradually smoothing volatility indicates that the expansion of market size and increased capital flow are buffering the diminishing returns effect brought by the halving.

From the perspective of supply and demand, the halving trend is not merely driven by reduced supply, but rather the result of a dynamic balance of supply and demand intertwined with market expectations. The early entry of institutional funds and long-term layouts have established new price support for the market, while retail investors' FOMO sentiment has further amplified the increase.

It is worth noting that this round of halving is the first to break the historical high (ATH) before the halving. Based on the overall performance before and after the halving, the current market is still in an upward phase, and future growth may continue to find a new balance in the supply-demand game.

The pullback amplitude in this bull market is far smaller than in previous cycles.

A significant feature of this round of the Bitcoin market is the noticeably reduced pullback amplitude, demonstrating unprecedented buying power and market resilience. Compared to previous cycles where pullbacks often reached 30% or even over 50%, the deepest pullback in this round was only around 30%, indirectly confirming the improvement in the overall supply-demand relationship in the market, and also showing the dual support of institutional funds and favorable policies. Notably, the approval of the Bitcoin spot ETF in the US and the positive changes in the related policy environment have injected long-term funds into the market and boosted investor confidence.

This shallow pullback phenomenon can be seen as a sign of the gradual maturation of market structure. With the deep involvement of institutional investors, the Bitcoin market is transitioning from the high-volatility phase driven by early retail investors to a more stable development dominated by institutional funds. Additionally, the introduction of spot ETFs has also provided convenient entry channels for long-term funds, reducing the severe pullbacks caused by short-term market sentiment fluctuations.

Bitcoin's market share has reached a multi-year high

The Bitcoin Dominance Index (BTC.D) is an important indicator for measuring the proportion of Bitcoin's market capitalization in the entire cryptocurrency market. Since September 2022, Bitcoin's market share has shown an overall upward trend, breaking 60% at one point in 2024, with an annual increase of over 10%, refreshing the high since April 2021. This phenomenon has a historical basis in Bitcoin's cycles, typically marking the concentrated inflow of funds at the beginning of a bull market.

According to past patterns, the initial stage of a bull market is often accompanied by an increase in Bitcoin's market share, as funds during this phase flow more into Bitcoin, the core asset of the market, while the performance of other tokens lags behind. When Bitcoin's market share reaches a peak, market liquidity and investment sentiment often approach a critical point. At this time, investors begin to take profits, and Bitcoin's market share subsequently declines, with funds gradually shifting towards altcoins, forming the so-called 'Altcoin Season.'

However, the rise of Bitcoin's market share this time is different from the past, as the deep involvement of institutional funds and the approval of spot ETFs have further strengthened Bitcoin's dominant position, significantly enhancing its appeal compared to other assets. This may mean that the peak of Bitcoin's market share will be more sustainable in the future bull market, while the arrival of 'Altcoin Season' may be delayed or even weakened, leading the market structure to gradually trend towards a more centralized pattern.