A new theory circulating in the crypto market is challenging how investors 
interpret Bitcoin’s recent price decline. In a post shared on X (formerly 
Twitter), market analyst Crypto Rover argued that Bitcoin is no longer trading 
as a simple supply-and-demand asset, and that this structural shift is a major 
reason behind the current sell-off. A ‘Parallel Financial Layer’ Rover&#8217;s 
central claim is that although Bitcoin&#8217;s on-chain supply cap of 21 million 
coins has not changed, the way Bitcoin is traded in modern financial markets 
has effectively diluted its scarcity. According to him, focusing only on spot 
buying and selling misses what is really driving price action today. BTC, he 
says, no longer moves primarily based on physical ownership of coins, but on 
activity in massive derivatives markets that now dominate price discovery. 
Related Reading: What Went Wrong With Crypto? A Postmortem As the analyst 
highlighted, in Bitcoin’s early years, its valuation rested on two fundamental 
principles: a strictly fixed supply of 21 million coins and the impossibility 
of duplicating that supply. These features made Bitcoin uniquely scarce, with 
prices largely determined by real buyers and sellers exchanging coins in the 
spot market. However, over time, Rover asserts that a &#8220;parallel financial 
layer&#8221; developed on top of the blockchain itself. This financial layer 
includes cash‑settled futures, perpetual swaps, options contracts, prime 
brokerage lending, wrapped Bitcoin products such as WBTC, and total return 
swaps. None of these instruments create new Bitcoin on the blockchain, but 
they do create synthetic exposure to Bitcoin’s price. According to Rover, this 
synthetic exposure now plays a central role in determining how Bitcoin trades. 
As derivatives trading volumes grew and eventually surpassed spot market 
activity, Rover argues that Bitcoin’s price stopped responding mainly to 
on‑chain coin movement. Instead, prices increasingly reflect leverage, trader 
positioning, margin stress, and liquidation dynamics. In practical terms, this 
means Bitcoin can move sharply even when there is little actual buying or 
selling of real coins. Why Bitcoin Moves Without Spot Selling Rover also 
highlights the concept of synthetic supply, explaining that a single Bitcoin 
can now be used simultaneously across multiple financial products. One coin 
may back an exchange-traded fund (ETF) share while also supporting a futures 
contract, a perpetual swap hedge, options exposure, a broker loan, or a 
structured investment product. While this does not increase Bitcoin’s actual 
supply, it dramatically increases the amount of tradable exposure linked to 
that same coin. When this synthetic exposure grows large compared with the 
real supply of Bitcoin, the market’s perception of scarcity weakens. This 
phenomenon, often described as synthetic float expansion, changes how prices 
behave. Rallies are more easily shorted using derivatives, leverage builds 
rapidly, liquidations become more frequent, and volatility increases. 
According to Rover, this structural shift makes price movements feel 
disconnected from on‑chain fundamentals. Yet, the analyst notes that the 
leading cryptocurrency is not unique in this regard. Related Reading: Why The 
Market Cap Argument For XRP Price Not Reaching $10,000 Is ‘Flawed’ Similar 
transitions occurred in markets such as gold, silver, oil, and major equity 
indices. In each case, once derivatives markets overtook physical trading, 
price discovery moved away from supply alone and became increasingly 
influenced by financial positioning. This framework also helps explain why 
Bitcoin sometimes declines even in the absence of heavy spot selling. Price 
pressure can come from forced liquidations of leveraged long positions, 
aggressive futures shorting, options hedging activity, or ETF arbitrage 
trades. Importantly, Rover emphasizes that Bitcoin’s hard cap has not changed 
at the protocol level. The 21 million limit remains intact on the blockchain. 
What has changed, he argues, is the financial structure surrounding Bitcoin. 
He concluded his analysis by asserting that in today’s markets, “paper 
Bitcoin” has become more influential than physical ownership, and that 
dominance is playing a key role in the market’s recent instability. Featured 
image from DALL-E, chart from TradingView.com

Top Analyst Says ‘Paper Bitcoin’ Is Driving The Market, Not The 21 Million Supply Cap

BlackRock’s Bitcoin ETF posted inflows on Friday following a turbulent week 
for Bitcoin, marking only its 11th day of net inflows in 2026.

$231.6M pours into IBIT following ‘second-worst’ day for ETF price

Sberbank, Russia’s largest bank, stated that it was preparing to roll out a 
program of crypto-backed loans for corporate customers. The institution 
stressed that it was currently finalizing the infrastructure needed to scale 
up the rollout of these financial products. Sberbank Prepares To Scale 
Issuance Of Crypto-backed Loans Russian banks are prepared to take a […]

Russia’s Sberbank to Start Issuing Loans Backed by Crypto Collateral

Bitcoin has experienced one of its sharpest corrections in recent years, 
slipping below the $65,000 level and reaching its lowest price since October 
2024. The decline reflects persistent selling pressure across the crypto 
market, accompanied by deteriorating macro sentiment, reduced liquidity, and 
cautious positioning among institutional participants. Recent price action 
suggests the market is entering a critical phase where confidence, rather than 
technical levels alone, may determine the next directional move. Related 
Reading: Bitcoin Short-Term Holders Deep In Loss: MVRV Signals Capitulation 
Phase Amid this uncertainty, the Binance SAFU Fund disclosed the purchase of 
an additional 3,600 BTC, valued at roughly $233.37 million. While such 
acquisitions do not guarantee a market reversal, they indicate continued 
strategic accumulation by major industry players even during periods of 
elevated volatility. Market sentiment has deteriorated markedly. Several 
sentiment indicators now sit near levels last observed during the 2022 bear 
market, when risk appetite contracted sharply and investors adopted defensive 
positioning. This environment typically coincides with reduced speculative 
activity, heightened caution among retail traders, and increased scrutiny from 
institutional capital. Institutional Accumulation Emerges Amid Prolonged 
Capitulation Phase Arkham data indicates that the Binance SAFU fund has 
continued accumulating Bitcoin, bringing its total recent purchases to 
approximately 6,230 BTC, valued near $434.5 million. While such activity 
signals ongoing participation from large institutional entities, it does not 
necessarily imply an imminent price recovery. Historically, significant 
purchases during corrective phases often occur alongside broader market stress 
rather than marking an immediate turning point. Current market conditions 
increasingly resemble a classic capitulation phase. Capitulation typically 
emerges when sustained price declines force weaker holders to exit positions, 
often at losses, leading to elevated exchange inflows, compressed liquidity, 
and sharp sentiment deterioration. These episodes can persist longer than many 
participants anticipate, particularly when macroeconomic uncertainty, risk-off 
positioning, and tightening liquidity conditions coincide. Importantly, 
capitulation does not follow a fixed timeline. In prior cycles, similar phases 
unfolded over weeks or even months before a durable bottom formed. During 
these periods, volatility tends to remain elevated, failed rallies are common, 
and confidence rebuilds gradually rather than abruptly. The key variables to 
monitor include exchange flows, derivatives leverage, spot demand recovery, 
and broader macro signals. Until those metrics stabilize, the base case 
remains continued market fragility. Large-scale accumulation by institutional 
funds may provide structural support, but it rarely prevents extended 
consolidation or further downside during capitulation environments. Related 
Reading: Ethereum Coinbase Premium Drops To 2022 Bear-Market Levels: 
Capitulation Or Further Downside? Weekly Structure Shows Breakdown Below Key 
Support Bitcoin’s weekly chart shows a clear deterioration in market structure 
after losing the $70K region, a level that had previously acted as both 
psychological and technical support. The latest candle reflects strong 
downside momentum, with price briefly touching the $60K zone before 
stabilizing near $65.9K. This move confirms a breakdown from the prior 
consolidation range and shifts focus toward whether this decline represents a 
deeper bear phase or a late-cycle correction. From a trend perspective, 
Bitcoin is now trading below the 50-week moving average while approaching the 
100-week average. Historically, a critical dynamic support during corrective 
phases. The 200-week average remains far below, indicating the long-term macro 
trend has not fully reversed, although intermediate momentum has clearly 
weakened. Related Reading: Are We Near A Bitcoin Bear Market Bottom? History 
Offers A Framework Volume dynamics also matter here. The recent selloff shows 
rising participation compared with earlier consolidation periods, suggesting 
distribution rather than simple profit-taking. However, sustained high volume 
without further price acceleration downward could signal seller exhaustion. If 
Bitcoin fails to reclaim the $70K area, downside risk toward the $60K–$55K 
zone remains plausible. Conversely, stabilization above current levels would 
indicate absorption, a necessary precursor for any meaningful recovery. 
Featured image from ChatGPT, chart from TradingView.com

Binance SAFU Fund Adds 3,600 Bitcoin ($233M) As Market Faces Pressure

Erebor doubled its valuation to $4 billion after a $350 million Lux Capital- 
led funding round late last year.

Cryptocurrency price in USD