Is Crypto Really Entering a "Stabilization Phase"? Don't Bet on It.

H2: Questioning the "Stabilization Phase" Narrative

Bitfinex analysts are calling it a "stabilization phase" for crypto. Debt reduction, seller exhaustion, capitulation of short-term holders... it all sounds very tidy [Source: Crypto Market Enters a Stabilisation Phase, Experts Say]. They even point to the SOPR indicator (Spent Output Profit Ratio, for the uninitiated) dipping below 1, which, they say, happened at previous cyclical lows.

But here's where the data needs a closer look. Yes, the SOPR dipped. But the depth of realized losses? A whopping $403.4 million per day. That's not just a dip; that's a freefall. And while they claim it signals the "end of capitulation," such a bold statement requires more than a passing mention of past declines. What were the realized losses then? Context matters.

Open interest in BTC futures is down, sure, from $94.12 billion to $59.17 billion. Leverage is decreasing, they say. And this is the part of the report I find genuinely puzzling. A drop of roughly 37% – to be more exact, 37.13% – in open interest isn't exactly a "controlled reset." It suggests a significant exodus, a pulling back from the table. Is that stabilization, or is that fear?

H2: Examining Institutional Investment Claims

The Bitfinex report highlights BlackRock's IBIT fund increasing its strategic portfolio allocation by 14%, reaching 2.39 million shares. Even "conservative bond funds" are supposedly dipping their toes in, they claim. And Texas, the first US state to publicly invest in Bitcoin, is touted as "symbolic."

Let's unpack this. A 14% increase in a BlackRock fund (likely a small portion of their overall portfolio) isn't a tidal wave. It's a ripple. And the "conservative bond funds"? Show me the numbers. Which funds? How much are they allocating? Without specifics, it's just marketing fluff.

The Texas investment, while symbolically interesting, is likely just a drop in the bucket (the exact scale isn't mentioned). A state pension fund allocating a tiny percentage to Bitcoin isn't the same as institutional adoption. It's a toe in the water, testing the temperature.

Then you have the Bitcoin price slide [Source: Crypto Market Update: Bitcoin Price Slide Continues Despite Rising Open Interest]. Bitcoin was priced at US$85,482.46, down by 6.4 percent over 24 hours. The sharp downturn was influenced largely by rising expectations of a Bank of Japan rate hike at its December meeting, which triggered a surge in Japanese bond yields, strengthening the yen and prompting global investors to pull capital from risk assets like Bitcoin. This caused liquidations of speculative long positions and created downward price pressure.

That is far from a stabilization phase.

H2: Analyzing Market Pressures and Potential Risks

Farzam Ehsani, CEO of VALR, points to the potential exclusion of major crypto-holding companies like Strategy from global indices as adding pressure. This "expected forced sell-off" weakens market structure and liquidity. The implications of this are significant – a major player forced to liquidate holdings due to index changes could trigger a domino effect, pushing prices lower and further destabilizing the market.

And then there's the Phong Le quote about Strategy potentially selling Bitcoin to fund dividend payments. Prediction markets may see a low probability of this happening, but the possibility alone introduces uncertainty. The market hates uncertainty.

H2: Goldman Sachs Acquires Innovator Capital Management

The report also mentioned that Goldman Sachs has agreed to buy Innovator Capital Management. That is a good point. Goldman Sachs (NYSE:GS) has agreed to buy Innovator Capital Management, a company specializing in defined outcome ETFs, in a deal worth about US$2 billion in cash and stock, according to a Monday announcement.

Defined outcome ETFs are special funds that limit losses or cap gains for investors using options contracts.

Innovator's US$28 billion in assets and 159 ETFs will significantly enhance Goldman Sachs Asset Management's ETF portfolio, increasing that bank’s total ETF lineup from US$51 billion to US$79 billion.

The acquisition payment partly depends on Innovator meeting certain performance targets after the deal closes, which were not publicly disclosed. The deal is expected to close in Q2 2026, subject to regulatory approval and other usual conditions.

Goldman Sachs will fully own the Innovator business, integrating its 60-plus employees into Goldman's teams. However, Innovator's investment managers and services will remain unchanged.

H2: Conclusion: A Premature or Misleading Assessment

"Stabilization phase"? I'm not buying it. The realized losses are too high, the open interest decline is too steep, and the institutional "adoption" is overhyped. The potential for forced sell-offs and the lingering uncertainty around major players paints a far less rosy picture. Maybe this is a temporary bottom, but calling it "stabilization" is, at best, premature and, at worst, a deliberate misreading of the data.