Bitcoin Sees Slow Bleed as Distribution-Driven Selling Pressure Intensifies: Bitfinex

May’s performance suggested that internal market dynamics were the major driver of weakness, rather than macro conditions.

Similar to previous bear markets, bitcoin (BTC) is now on track to experience a slow bleed regime. As analysts explained in the latest Bitfinex Alpha report, this seasonal pattern is further aggravated by weakening demand from spot and institutional avenues.

Even options traders have stopped paying for protection as implied volatility continues to decline and derivatives fall to multi-month lows. This means they are exhibiting a diminishing appetite for paying high premiums for hedging bets.

Market in Slow Bleed Regime

According to the Bitfinex report, volatility sellers are now in control, contributing to the reduction of the likelihood of large price moves in either direction. With open interest gradually declining, the Bitcoin market is facing a slow bleed regime, rather than a sharp deleveraging event.

Proof of the current market condition is bitcoin’s performance for May. The leading digital asset recorded an early-month rally that pushed it above $82,000, but ended the month lower with BTC falling 12.5% from its local top. Bitfinex analysts said the performance highlighted a growing disconnect between broader macroeconomic conditions and the crypto market.

May’s performance also suggested that internal market dynamics were the major driver of weakness, rather than macro conditions. The transition from a phase of expansion at the beginning of the month to a period of sustained distribution highlights a lack of conviction among crypto market participants, not deteriorating external factors.

A clear sign of the lack of conviction is spot Bitcoin exchange-traded funds (ETFs) witnessing $3 billion in cumulative outflows over the past three weeks. Additionally, weakening spot demand, profit-taking from short-term holders, and poor institutional participation erased pillars that supported Bitcoin’s recovery earlier this year. This dynamic made the market more vulnerable to distribution-led selling pressure, according to analysts.

Will June End Negatively Like May?

Furthermore, market experts believe June may end on negative terms just like May if BTC tracks previous bear market patterns.

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Seasonal data since 2013 have shown May ending with an average return of 7.36% and a median above 3.5%. While bear seasons in 2018 and 2022 have seen brief recoveries after negative yearly starts, geopolitical tensions have displaced the dynamics over the past two years. Last year was the U.S. tariffs saga, and this year, the Iran conflict. This increases the likelihood of a negative June ending.

However, the prediction for the end of June could be wrong if the market experiences a strong shift in structural inflows from ETFs and institutional products. Aggressive spot accumulation could also change the dynamic and lead to a more positive outcome.