Bitfinex Alpha | BTC demand weakens

December 8th Bitfinex Alpha | BTC demand weakens

Bitcoin has entered a phase where weakening spot demand collides with persistent structural weakness, making it clear that the market is stabilizing but far from healthy. Despite rallying from recent lows, BTC remains trapped in a narrow range between $84,000 and $91,000 while the S&P 500 is near all-time highs, highlighting deepening relative weakness and growing decoupling from traditional risk assets. On-chain data shows more than 7 million BTC in unrealized losses, mirroring the situation last seen during the volatile price action in early 2022 and highlighting the market’s struggle to return to the true market average, the line between mid-cycle fatigue and full-blown bear market deterioration. However, capital inflows remain modestly positive, providing at least a thin cushion against further downside.

At the same time, demand on the spot side has declined significantly. U.S. Bitcoin ETFs continue to experience outflows, taker buying has significantly worsened, and the cumulative volume delta on major exchanges has turned decisively negative, indicating that traders are selling more than they are adding.

The latest economic indicators show the U.S. economy is still moving forward, but at a much slower pace, with consumer spending slowing, inflation continuing and signs of tension emerging. Real consumer spending was flat in September, with incomes barely keeping up with prices, highlighting the financial strain on low- and middle-income households and hinting at a softer fourth quarter. Inflation remains steady at 2.8% from a year earlier, complicating hopes for a widely anticipated December interest rate cut, especially as Fed officials are divided over whether the economy is cool enough to warrant easing.

On the other hand, labor and economic indicators reveal a similarly uneven situation. Even as unemployment claims fell to their lowest level since 2022, private sector employment unexpectedly fell in November, led by small business job losses, showing employers’ reluctance to cut jobs. The services sector continued to expand due to strong demand and an increasing backlog of orders, but employment within the sector contracted and prices remained high. Taken together, these data suggest that the economy has cooled unevenly and, while supported by resilient services and stable employment, is becoming increasingly vulnerable as persistent inflation undermines household strength and weighs on growth ahead of the Fed’s next policy decision.

In news, Vanguard, long known for rejecting cryptocurrencies as too speculative, has reversed its stance by allowing customers to trade third-party crypto ETFs and mutual funds, including those related to Bitcoin and Ethereum. Although the company still has no plans to offer its own crypto products and has made it clear that it does not support any investment allocation to meme coins, the decision reflects growing confidence in the maturity of the crypto market and strong investor demand.

The government has also updated its view of the crypto industry, with the UK passing the Property (Digital Assets, etc.) Act 2025, which recognizes cryptocurrencies as a separate form of personal property. The reforms are seen as an important step towards making the UK a more attractive environment for digital asset businesses, providing clearer rights in cases of theft, bankruptcy and inheritance. Regulators are also making strides in the United States, with the Commodity Futures Trading Commission for the first time authorizing the listing of spot crypto products on federally regulated exchanges, aimed at providing a safer and more regulated alternative to offshore markets. Taken together, these developments reflect a global trend toward integrating digital assets into established financial and legal systems and expanding access, protection, and legitimacy to crypto markets.