[1] Introduction: Bitcoin broke through $90,000, and quantitative algorithms also shouted "Uptober". However, ETF funds turned to net outflow, and liquidity obviously flowed into derivatives.
Is this rebound based on a recovery in actual demand, or is it an illusion caused by a reallocation of liquidity? Exploring the nature of the rebound is the core topic of this week's market analysis.
[2] Market Internal Analysis ① (Price and Asset Structure): Bitcoin (+1.91%) and Ethereum (+4.43%) led the market with strong performance, but this was accompanied by a relative increase in Ethereum's share and a decrease in BTC's share. Altcoin were even stronger. Dogecoin (+10.96%), Cardano (+8.91%), Ripple (+6.46%) and other altcoins saw significant gains, far exceeding those of Bitcoin. However, this round of gains was not based on technological or ecosystem expansion, but was largely influenced by leveraged trading dominated by derivatives, which means that it was not a structural diffusion, but rather contained the possibility of a short-term correction.
In particular, the DeFi sector and some Meme tokens saw a surge in trading volume (over 29%), but the holdings were highly biased, and the recovery in on-chain demand was weak. This doesn't mean that buying pressure has spread to all assets, but rather that speculative funds have spread to assets with low liquidity.
[3] Market Internal Analysis ② (Liquidity and Fund Flows): Stablecoin trading volume (+80.02%) and cryptocurrency derivatives trading volume (+111.58%) surged. This suggests that, compared to traditional new fund inflows, it is more about existing investors increasing leverage and volatility betting. ETF funds saw a net inflow of $317.7 billion in 2025, but recently, on a daily basis, they have turned into large-scale outflows again (BTC ETF -$348 million, ETH ETF -$72 million).
Glassnode data shows that the 30-day average ETF inflow has turned negative, which is noteworthy. Investor confidence is cooling, and the likelihood of a disruption in net long-term capital inflows is increasing. This could structurally limit the sustainability of any rebound.
[4] Macroeconomic variables or policy environment: Although the Federal Reserve has launched a dual easing of interest rate cuts and restarted small-scale quantitative easing (CMD style), the weak employment indicators (ADP employment -32,000) and the uncertainty under the government shutdown issue still exist. Although the market has already reflected an 88% probability of further interest rate cuts in October and December, actual liquidity is atypically spreading to traditional assets such as ETFs, bonds, and high-dividend funds.
Furthermore, the U.S. Market Structure Act, scheduled for review on January 15 (which clarifies the jurisdiction of the SEC/CFTC), may increase uncertainty regarding institutional participation in the market in the short term. The OECD Cryptocurrency Tax Sharing Framework (CARF), which may lead to stronger account tracking and disclosure obligations, is also a significant uncertainty factor in global institutional flows.
[5] Conclusion: This week, the market showed a rebound characterized by "strong prices but weak confidence." ETF outflows, concentrated liquidity, and the spread of speculative derivatives are undermining the sustainability of the upward trend. Although the rebound exists, it is difficult to regard it as a solid recovery structure.
The key variable next week is whether the US government shutdown will continue and the resulting delays in releasing labor market indicators. This not only concerns the timing of interest rate cuts but could also be a significant watershed moment for changes in market risk appetite. For a rebound to be effective, it needs to be accompanied by a recovery in ETF inflows, increased on-chain transactions, and DeFi/stablecoin inflows. These aspects need to be closely monitored to assess the depth and sustainability of the rebound.
