Key Takeaways
- Crypto is locked in a bear trend despite positive macro news fueling equities
- BTC’s price action shows a bear flag pattern, technically targeting the $70k region
- Crypto markets face a potential structural risk from DAT & miner selling in 2026
Digital Asset Commentary
The crypto market continues to be heavily influenced by the aftermath of the record leverage liquidation event on October 10, 2025, with downside momentum holding an unrelenting grip. This is creating a major divergence: while the groundwork is being laid for a potential bullish rally, no clear catalyst has materialized. This bearish sentiment in crypto has persisted despite several significant positive headlines and potential catalysts in December, including; Vanguard granting access to Bitcoin ETFs, the Fed announcing a $40 billion a month treasury buyback, a more dovish-than-expected Fed Chair Jay Powell, declining USD relative value combined with rising global liquidity, and the CFTC & DTCC providing regulatory clarity to crypto markets paving the way for additional blockchain products..
This negative bias in the crypto market is notably absent in other asset classes, as equities and metals have continued to rally, with gold near all-time highs and silver punching a new all-time high (ATH). The primary technical concern for BTC is a classic bear flag formation, which suggests even further downside. Based on the length of the flagpole preceding the consolidation, a measured move could potentially drive prices into the low $70k region.
A major structural risk also comes from Digital Asset Treasury (DAT) companies holding BTC and altcoins. Most DATs, with the notable exception of BMNR, have seen their market capitalization relative to their treasury value (mNAV) drift significantly below 1.0. To shore up their balance sheets and attempt to move their mNAV ratio back to 1.0, DATs can sell digital assets to buyback shares. Additionally, Bitcoin miners, many of whom have diversified into AI/HPC data centers, are also under similar potential financial duress if BTC enters a deeper bear market. A classic signal of miner distress, or “capitulation,” is a rapidly declining network hashrate. While the hashrate has only slightly pulled back from its ATHs, the current profitability levels indicate significant stress. Over the coming year, a critical indication to watch will be the velocity of selling from DATs and miners, which can be tracked and quantified using on-chain blockchain metrics.
