Bitcoin steadies amid deleveraging as ETFs reshape flows

Galaxy Digital view: consolidation now, gradual upside, not V-shaped

Public remarks from the firm’s leadership indicate that a V-shaped recovery is unlikely; instead, the base case is a consolidation phase followed by gradual upside. crypto-s-long-term-outlook” target=”_blank” rel=”nofollow noopener”>As reported by CoinDesk, its asset-management head characterized the latest selloff as “healthy deleveraging,” with infrastructure growth and institutional adoption underpinning the longer-term outlook (https://www.coindesk.com/business/2026/02/14/galaxy-s-steve-kurz-sees-great-convergence-driving-crypto-s-long-term-outlook).

Context from recent commentary frames the current drawdown as a leverage purge that resets risk without signaling systemic failure. KuCoin News covered remarks that the speculative era is fading, with attention shifting toward real-world assets, regulation, and lower-volatility yield streams (https://www.kucoin.com/news/flash/galaxy-digital-ceo-predicts-end-of-crypto-speculation-era?utm_source=openai).

Why healthy deleveraging and institutional adoption shape recovery, Galaxy, ARK views

Healthy deleveraging removes excess leverage, reduces forced sellers, and can improve market resiliency, but it often prolongs consolidation. According to ARK Invest, Bitcoin’s current phase increasingly reflects institutional participation, ETFs, treasuries, and regulatory structure, dynamics associated with lower volatility and slower, more durable recoveries.

“We are in the consolidation phase in crypto…” said Michael Novogratz, CEO, in an earnings call, emphasizing that markets may build support before advancing, as reported by Bloomberg (https://www.bloomberg.com/news/articles/2024-05-14/galaxy-s-novogratz-says-bitcoin-to-trade-between-55-000-to-75-000-in-quarter?utm_source=openai).

Taken together, these perspectives suggest the path forward is a marathon, not a sprint. Deleveraging and institutional adoption can strengthen foundations, but their impact tends to materialize over quarters rather than weeks.

Ranges: In the wake of deleveraging, markets often trade sideways as risk capital rebuilds. This regime typically features mean-reversion and fading momentum rather than trend-following breakouts.

Volatility: Forced liquidations can spike short-term volatility, but subsequent positioning resets may compress realized volatility. A slower tape is consistent with a maturing, institutionally influenced market structure.

Liquidity: After leverage unwinds, order books can thin and depth can fragment, especially outside U.S. hours. Over time, steadier spot flows and improved market-making can restore depth, supporting more durable moves.

What could shift chop to a sustained uptrend

Liquidity and ETF/institutional flows

Consistent net inflows into spot ETFs and broader institutional participation could reduce directional fragility. A wider buyer base, treasuries, asset managers, and corporates, may dampen drawdowns and support higher lows, especially as redemptions and creations stabilize daily flow variance.

Regulatory clarity and infrastructure maturation

Clear, enforceable rules and mature infrastructure, custody, collateral management, and surveillance, can reduce operational and legal uncertainty. As counterparty and settlement risks fall, larger allocators may scale positions, improving market depth and trend persistence.

FAQ about V-shaped recovery

What does ‘healthy deleveraging’ mean and how does it affect Bitcoin and altcoins?

It’s the orderly reduction of leverage. It removes forced sellers, cleans up balance sheets, and often leads to slower, range-bound trading before conditions improve.

How do spot Bitcoin ETF flows and institutional participation influence the pace of recovery?

Steady ETF inflows and broader institutional buyers can normalize liquidity, reduce volatility spikes, and support gradual uptrends, but effects typically unfold over quarters, not days.