Institutional Support Yet to Emerge as Bitcoin Faces Sharp Price Decline
Bitcoin's nearly 30% drop from its January peak raises questions about whether institutional investors will intervene to absorb ongoing selling pressure from short-term holders.
Elena Whitmore 
BTC struggles to find support after steep correction
After reaching an all-time high of $109,590 on January 20, Bitcoin (BTC) has undergone a notable pullback, falling below $77,000 and marking a 29.7% correction. This drop represents the second-largest retracement in the current bull cycle, prompting concerns over whether institutional investors will step in to stabilize the market. In its latest report, Bitfinex Alpha pointed out that BTC is currently “waiting for long-term holders or institutional demand to absorb the recent selling pressure from short-term holders.”
Although BTC has previously recovered after similar corrections, analysts caution that the market context this time appears different. The report highlights that without substantial demand from institutional players, BTC could face prolonged price stagnation or a deeper slide.
Institutional fund flows signal reduced demand
One of the more concerning signs for market watchers is the recent trend in spot BTC ETF outflows. According to the report, investors pulled a total of $921.4 million from ETFs across four of the five trading days last week. This wave of outflows reinforces the view that institutional support has weakened compared to earlier phases of the bull market.
In previous market corrections, BTC pullbacks were generally limited to the 18%–22% range. The current near-30% decline suggests that the presence of large buyers is not as dominant, increasing the risk of sustained volatility. Should institutional capital return in significant volumes, it may help BTC regain stability. Until then, the market remains vulnerable to further downside pressure.
Short-term investors deepen selling pressure
Market data indicates that short-term holders (STH)—addresses that have held BTC for less than 180 days—have been selling at a loss, particularly since prices dipped below $90,000. These investors experienced unrealized losses, which have historically contributed to greater selling activity. Within this group, “shrimp” wallets—those holding less than 1 BTC—are especially sensitive to price fluctuations and are often quick to exit once prices bounce, locking in limited gains.
Cost basis trends among recent buyers further highlight waning demand. In healthy markets, the cost basis of newer entrants typically exceeds that of previous investors, signaling optimism. However, during Q1 2025, this pattern reversed, showing that new buyers have been reluctant to absorb market supply, especially as BTC fell below $90,000.
Key metrics reflect market hesitation
A critical indicator used to assess current sentiment is the Short-Term Holder Spent Output Profit Ratio (STH-SOPR). This metric shows whether short-term investors are selling at a profit or loss. Since BTC fell under $95,000, the 30-day moving average of the STH-SOPR has remained below 1, signaling that most STHs are exiting at a loss.
This ratio dropped to 0.97 when BTC briefly touched $78,000, marking one of the most significant capitulation events of this cycle. These levels often suggest seller exhaustion, where weaker hands leave the market and more resilient investors consider re-entering. According to Bitfinex Alpha, such deeply negative readings may act as a counter-trend buy signal for long-term market participants.
As BTC navigates one of its sharpest corrections in recent memory, all eyes remain on institutional investors. Whether they re-engage or continue to stay sidelined will likely define the next phase of BTC’s price trajectory.
