Why did the rally slow down after Bitcoin broke through 126K? Institutional funds are changing the rules of the game for Crypto price increases.

For investors tracking BTC trends, a clear phenomenon is: each rebound seems to be gradually diminishing in magnitude. After Bitcoin surged to a historic high of $126,080, many expected a more intense rally, but the reality shows different signals.

Why is this bull market fundamentally different from the previous two?

There is a saying in the crypto world: “a four-year cycle,” but data is overturning this simple assumption. According to on-chain analysis, the market structure in 2024 has undergone a fundamental change.

The previous pattern driven by retail speculation, prone to “skyrocketing / surge” and rapid “crash,” is being gradually replaced by sustained capital inflows from institutional investors. The direct result is: cryptocurrencies are rising more durably, but the explosive power of each surge is weakening.

The key indicator “Unrealized Profit and Loss” (NUPL) best illustrates the issue. This indicator records the overall market profit/loss status:

• 2017 cycle: NUPL shows a single peak followed by a straight crash, a typical “quick rise, quick fall”
• 2021 cycle: Forms a clear double top structure, corresponding to two waves of dispersed gains
• 2024 cycle: Attempting a third peak, showing more small fluctuations, with capital rotation clearly slowing down

What is driving this change? Institutional allocation.

How Spot ETFs are reshaping the driving force behind crypto surges

Since the US approved a spot Bitcoin ETF in January 2024, the market supply and demand relationship has undergone a qualitative change:

Capital inflow scale Since the ETF launched, by mid-year, institutions have held over 1 million BTC through ETFs, accounting for 5% of the global circulating supply. This number may seem small, but it signifies that a large amount of long-term capital from pension funds, insurance companies, and others has entered this market.

Liquidity improvement The ETF’s daily trading volume now accounts for over 30% of Bitcoin’s total trading volume, directly reducing market volatility. What does more stable liquidity mean? It means prices are less likely to be pushed down by large short-term trades, but it also makes rapid surges driven purely by sentiment more difficult.

Demand structure shift Institutional funds tend to “buy and hold.” Unlike retail investors who may frequently trade, institutional capital is inclined toward long-term holding, significantly reducing short-term selling pressure. This provides price support but also limits short-term explosive gains.

Crypto price surges are gradually diminishing each cycle

Data most intuitively reflects this trend:

Can you see the pattern? The percentage gains in each rebound are gradually shrinking.

This means the probability of “doubling in a few months” market conditions has greatly decreased. The super rallies of 100x or 1000x in the past are almost impossible under the current market structure. Instead, a more “moderate” but longer-lasting upward trend—industry insiders call it a “slow bull”—is emerging.

How should investors adapt to this new normal?

Reset expectations Forget about “short-term wealth overnight.” If you’re still expecting a few months to double your holdings, you may need to adjust your strategy. The current logic favors holding for 1-3 years, rather than quick monthly rotations.

Prioritize liquidity assets Assets like Bitcoin and Ethereum, with high liquidity and institutional allocation, will benefit most from this institution-led surge cycle. In contrast, smaller altcoins, due to lower institutional participation, carry higher speculative risks.

Monitor market sentiment closely NUPL is an important reference. When NUPL exceeds 0.7, it indicates the market has entered an “extreme greed” zone, which is often a sign of phased profit-taking. In other words, when everyone is shouting bull market, it might actually be time to stay cautious.

Currently, BTC is fluctuating around $87,300, still some room from the peak of $126,080. But remember, this surge is characterized not by rapid spikes but by persistence and stability—institutional capital is rewriting the game rules with its capital volume.