Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesStocksEarnInstitutionAI & More
Crypto Enters a “Self-Funded Phase” As Liquidity Cools: Is A Recovery Next?

Crypto Enters a “Self-Funded Phase” As Liquidity Cools: Is A Recovery Next?

Coinpedia2025/11/06 17:36
By:Coinpedia
Story Highlights

Crypto markets are showing signs of cooling off lately. 

Liquidity is the primary force driving crypto cycles, however recent trends suggest that the flow of new capital into the market has slowed.

Wintermute analysts note that inflows through the main channels: stablecoins , ETFs, and digital asset treasuries (DATs) have slowed , leaving crypto in a “self-funded phase” rather than an expansion phase. They suggest that liquidity is likely to return once any of these channels pick up again.

Liquidity drives crypto cycles, and now, the money has stopped flowing in

Stablecoins, ETFs, and DATs have grown from $180B to $560B since early 2024, but momentum has slowed

Capital is rotating internally, not entering fresh → rallies die fast and breadth keeps narrowing pic.twitter.com/h9Rp2fJAcE

— Wintermute (@wintermute_t) November 6, 2025

Historically, when global money supply increases or real rates fall, the excess liquidity has flowed back into riskier assets like crypto. 

In the past cycles, most new money entered crypto through stablecoins. However, as the market has matured, DATs, stablecoins, and ETFs are bringing fresh capital into crypto. Analysts note that ETF assets, DAT holdings, and issued stablecoins provide a good measure of the total capital flowing into crypto. 

However, the momentum of DAT and ETF inflows has slowed. The inflows were strong through late 2024 and early 2025, but it has now faded. 

Analysts say that the slowdown matters because each of them represents a different source of liquidity. Stablecoins show how much risk crypto-native investors are willing to take. DATs reflect institutions looking for yield while ETFs track how much traditional finance is putting into crypto. 

Since all the three factors have slowed down, this shows that there is no fresh capital being invested. The liquidity in markets is just circulating within the system and is not expanding. 

However, looking at the broader economy, the money supply is not drying up. High SOFR rates are keeping funds in safe assets like T-bills, limiting investments in riskier assets. Still, global monetary easing continues and U.S. quantitative tightening has officially over in U.S.

The environment is still supportive however, the liquidity is just flowing into other risk assets like equity.

  • Also Read :
  •   EU Launches Full Probe Into Deutsche Boerse, Nasdaq Over Derivatives Cartel Allegations
  •   ,

Investors are shifting funds between major coins and altcoins, but not adding fresh money. This is why rallies have been short this cycle and the breadth has narrowed.

However, analysts note that if one of the main liquidity sources picks up again, then money could flow back into crypto.

“Until then, crypto remains in a self-funded phase, where capital is circulating, not compounding,” the analysts say. 

  • Also Read :
  •   Japan Becomes 11th Nation to Join the State-Backed Bitcoin Mining Race
  •   ,

Cryptoquant analysts note that Bitcoin’s Bull Score hit 0 for the first time since January 2020. All 10 on-chain indicators, including MVRV, ETF flows, stablecoin liquidity, etc are below trend. Historically, this has marked either macro bottoms or late-cycle distribution before trend reversal. This shows that we may be in a late-bull to early-bear phase rather than a deep capitulation.

For Bitcoin to pick up, the ETF inflows, liquidity growth, and long-term holder accumulation need to return, otherwise it could enter an extended consolidation phase. While liquidity flows in crypto have slowed, some analysts are still bullish. 

Analyst Michaël van de Poppe notes that the market is not in a bear phase but is experiencing a normal correction within a longer-term Bitcoin bull cycle. 

0
0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

Understand the market, then trade.
Bitget offers one-stop trading for cryptocurrencies, stocks, and gold.
Trade now!

You may also like

The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners

Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.

华尔街见闻•2026/11/12 03:56
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners

If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.

The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.

华尔街见闻•2026/11/12 03:46

After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends

Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.

智通财经•2026/11/12 03:42
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends

Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%

For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.

智通财经•2026/11/12 02:47
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%