Hassan Maishera
The cryptocurrency market has been in a bearish trend over the past few months, with BTC down by nearly 50% since the all-time high in October.
However, the recent Binance Research report suggests that there is still optimism despite the current de-risking phase.
BTC Down 52% from All-time High
Markets remain in a sustained de-risking phase driven by macro headwinds, a holding Fed, policy uncertainty, and AI-related capital rotation, pushing BTC to a ~52% drawdown from its October 2025 ATH.
The key question is starting to shift from 'how far does this go' to 'when does demand return.' The honest answer is that it depends heavily on a reversal in sentiment, which, for now, continues to be pulled in several directions at once.
The primary catalyst behind this dip is a rotation of attention and capital away from crypto and toward AI and other defensive narratives. The second is policy: expectations of hawkish Fed policy, the possibility of another partial government shutdown and continued geopolitical and trade tensions have left the environment unreceptive to risk-taking.
Binance Research added that as BTC consolidates, altcoins continue to lag. Their underperformance has been disproportionately severe compared to prior cycles. Capital is concentrating on the largest assets, reflecting a rotation toward durability and away from speculative beta. While painful for smaller tokens, this transition typically precedes stronger long-term foundations.
According to the report, supply expansion has intensified the effect. Roughly 11.6M out of the 20.2M tokens launched in 2025, many without users, revenue, or defensible differentiation, leading to price discovery to happen entirely on hype, are no longer actively traded.
Attention fragmented across an increasingly crowded market, user fatigue set in faster, and projects with fundamentals have had to compete with a constant pipeline of short-lived issuance. Unsurprisingly, most of these tokens are no longer actively traded and remain well below their initial valuations.
Furthermore, recent market performance is not just a crypto-only phenomenon. Equity markets have also repriced risk, particularly within the software sector, following rapid advances in the AI disruption narrative.
Macro Economic Factors Continue to Affect Market Performances
The report added that macro continues to be the primary driver of crypto markets, arguably more so than at any point in recent years. This week's key inputs were the January jobs report and its implications for the Federal Reserve.
BTC has historically been the single most sensitive major asset to changes in global liquidity conditions in the short term, more so than equities, gold, or any other benchmark risk asset. In an environment where liquidity is being constrained, that sensitivity is a headwind. The same sensitivity will become a tailwind the moment expectations shift.
Spot ETFs, Stablecoins, and RWAs to Drive Crypto Momentum
According to Binance Research, despite the drawdown and the noise, the structural tailwinds for crypto have not disappeared.
The first major sector to signify interest in the market is spot crypto ETFs. Despite a roughly 50% fall from the ATH, spot BTC ETF AUM has declined only modestly. That divergence is significant.
There have even been periods of net inflows across several days, indicating genuine opportunistic accumulation. This is a constructive medium-term signal that the ETF channel is functioning as a durable demand source, not just a bull-market vehicle. This resilience is particularly important given that another major flow channel this cycle, digital asset treasuries (DATs), has softened.
Another sector recording excellent growth is stablecoins. Stablecoin supply has remained near cycle highs. Unlike prior downturns, capital has not aggressively exited the on-chain dollar system. Liquidity is present, but appears to be waiting.
Real-world Assets (RWAs) continue to stand out in a risk-off environment, and this period is no exception. Capital preservation is the dominant theme, and RWAs are a natural vehicle.
The on-chain RWA market is approaching US$25B, with tokenized treasuries, commodities, and yield-oriented structures attracting capital seeking stability and transparency. Adoption is accelerating across institutions exploring tokenization pathways, reinforcing the durability of this trend.
According to Binance Research, the RWA thesis is unfolding largely as anticipated. Tokenized U.S. Treasuries now account for roughly US$10.7B on-chain. Private credit, tokenized equities, and yield vaults continue to attract allocations. Emerging markets are also seeing proportionally higher inflows and performance, reflecting the genuinely global nature of the opportunity.
DeFi Convergence Offers Further Optimism for the Market
The report stated that the most important forward-looking signal for DeFi: BlackRock, working with tokenisation firm Securitize, will make shares of its tokenised U.S. Treasury fund BUIDL tradable via UniswapX, Uniswap's institutional order routing and settlement layer.
According to Binance, selecting a DeFi protocol for settlement signals growing confidence in the maturity and reliability of decentralized infrastructure. More importantly, it outlines a repeatable blueprint: regulated entry, compliant access controls, atomic settlement, and continuous market availability. This is the structure required for equities, credit, commodities, and ETFs to scale on-chain.
The subsequent purchase of Uniswap’s governance tokens adds another layer of significance. The world’s largest asset manager has taken exposure within a DeFi protocol. Institutional participation is emerging in a market that already produces measurable cash flows.
What Next for the Crypto Market?
Binance Research believes that we are likely entering a phase of elevated volatility while markets search for clearer signals. Bitcoin's realized price, the average cost basis across holders, a proxy for where the aggregate market is 'in' at, sits at approximately ~US$55,000.
When the spot price approaches this level, it reflects a market where a large portion of holders are close to, or below, breakeven. This tends to amplify both the psychological pressure and the eventual significance of holding that level.
However, history across crypto and traditional markets shows a consistent pattern. When prices compress despite continued fundamental progress, conviction builds beneath the surface, and the product layer strengthens.
Once risk reprices, assets that advanced during the reset typically lead. For now, liquidity remains present but selective, waiting for clearer catalysts.
In the week ahead, focus turns to the release of the FOMC minutes and U.S. core PCE. The minutes will provide greater visibility into how policymakers assessed recent conditions at the last meeting, while the inflation print will update the near-term macro backdrop investors are navigating.
