Wintermute: Market recovery requires a rebound in spot demand, but there are few signs of it at present.

In its latest market analysis, Wintermute stated that last week's market exhibited characteristics of a capitulation sell-off—a surge in volatility, the liquidation of over $2.5 billion in positions, and a buy order of $60,000. Previously accumulated open interest and a surge in short selling led to a sharp drop in funding rates, which was further exacerbated by Friday's dramatic short squeeze. In a thin spot trading environment, leverage dominates price movements. Without a significant rebuilding of open interest, the sustainability of both bullish and bearish trends will be limited. A structural recovery requires a return to spot demand, but signs of this are currently scarce. A more serious reality is that the total unrealized losses of institutional holders of digital assets have reached approximately $25 billion, concentrated in a few institutions. Bitcoin's current price is below the holding costs of many institutions, and the premium (relative to net asset value) is compressing. These institutions have shifted from marginal buyers to passive holders—the major buying power of the past 18 months has cooled, and raising new funds in the current environment lacks appeal. In the future, the market may enter a period of high volatility and chaotic bottom-finding. Unless the Coinbase premium turns positive, ETF fund flows reverse, and basis interest rates stabilize, a sustained upward trend is unlikely. With retail investors diverting their attention to other asset classes, institutional fund flows into ETFs and derivatives have become the dominant force driving market direction.