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Public remarks from Galaxy Digital’s leadership suggest a V-shaped recovery is unlikely. Instead, the firm’s base case points to a consolidation phase followed by gradual upside, with its asset-management head describing the recent selloff as “healthy deleveraging.” The longer-term outlook is framed around infrastructure growth and institutional adoption, according to reporting by CoinDesk.
Recent commentary characterizes the current drawdown as a leverage purge that resets risk rather than indicating systemic failure. KuCoin News highlighted a shift away from a purely speculative cycle toward real-world assets, regulation, and lower-volatility yield streams.
In this view, “healthy deleveraging” reduces excess leverage and forced selling, which can improve market resiliency. However, it can also extend consolidation because risk capital typically needs time to rebuild. ARK Invest’s perspective, as reflected in the coverage, ties Bitcoin’s current phase to deeper institutional participation, including ETFs, treasuries, and a more defined regulatory structure—factors associated with lower volatility and slower, more durable recoveries.
Michael Novogratz, CEO of Galaxy Digital, said during an earnings call that markets may build support before advancing, with the firm describing the environment as a consolidation phase, Bloomberg reported.
After deleveraging, markets often trade sideways as risk capital returns. The described regime tends to feature mean-reversion and fading momentum rather than trend-following breakouts.
Forced liquidations can raise short-term volatility, but subsequent positioning resets may compress realized volatility. The coverage links a “slower tape” to a more mature, institutionally influenced market structure.
When leverage unwinds, order books can thin and depth may fragment, particularly outside U.S. hours. Over time, steadier spot flows and improved market-making are expected to restore depth, supporting more durable price moves.
The article points to consistent net inflows into spot ETFs and broader institutional participation as potential stabilizers. A wider buyer base—spanning treasuries, asset managers, and corporates—could dampen drawdowns and help support higher lows, particularly if daily flow variance from creations and redemptions stabilizes.
Clear, enforceable rules and maturing market infrastructure—covering custody, collateral management, and surveillance—are also cited as factors that can reduce operational and legal uncertainty. As counterparty and settlement risks decline, larger allocators may scale positions, improving market depth and trend persistence.
It refers to the orderly reduction of leverage. The process removes forced sellers, cleans up balance sheets, and often results in slower, range-bound trading before conditions improve.
Steady ETF inflows and broader institutional buyers can help normalize liquidity, reduce volatility spikes, and support gradual uptrends. However, the coverage notes these effects typically unfold over quarters rather than days.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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