Wintermute: Market recovery requires a rebound in spot demand, but there are currently few signs of this

According to Odaily, Wintermute stated in its latest market analysis article that last week's market exhibited characteristics of capitulation-style sell-off — volatility surged, over $2.5 billion in positions were liquidated, and there was buying interest at the $60,000 level. Previously, open interest had been accumulating, and the influx of short positions led to a sharp drop in funding rates. The intense short squeeze and liquidations on Friday further exacerbated volatility.

In the current environment of subdued spot trading, leverage is dominating price movements. If open interest is not significantly rebuilt, the sustainability of both directions in the market will be limited. Structural recovery requires a return of spot demand, but there are currently few signs of this.

An even harsher reality is that the total unrealized losses of digital asset holding institutions have reached approximately $2.5 billion, concentrated among a few institutions. The current price of bitcoin is already below the cost basis of many institutions, and the premium rate (relative to net asset value) has compressed. These institutions have shifted from being marginal buyers to passive holders — the main buying force over the past 18 months has already faded, and in the current environment, raising new funds is also unattractive.

Looking ahead, the market may enter a highly volatile and chaotic bottom-finding phase. Unless the premium on a certain exchange turns positive, ETF fund flows reverse, or basis rates stabilize, it is difficult to expect a sustained rally. As retail investors' attention shifts to other asset classes, institutional capital flows in ETFs and derivatives have become the dominant force in market direction.