Briefing
Bitcoin recently recovered to $116k, fueled by macro momentum and significant ETF inflows, yet it now confronts renewed sell pressure. This suggests a market grappling with strong upward pushes and underlying fragility. Profitability metrics improved, but elevated profit-taking indicates a risk of demand exhaustion, making sustained demand critical for stability.
Context
Many are wondering if Bitcoin’s recent price recovery is sustainable, or if the market is poised for another correction. Investors are seeking clarity on whether current demand can absorb increasing sell pressure and if the underlying sentiment supports further growth. This data helps answer if the bull market has true conviction or if it is merely a temporary bounce.
Analysis
The report examines various on-chain and off-chain indicators to paint a comprehensive picture. In the spot market, the Relative Strength Index (RSI) entered overbought territory, signaling strong momentum, yet declining Cumulative Volume Delta (CVD) and flat volumes suggest limited conviction from buyers as sellers pressed into strength. The futures market showed rising open interest and aggressive buy-side flows, but softer funding rates indicate cautious sentiment despite active leverage.
Profitability metrics, including supply in profit and Net Unrealized Profit/Loss (NUPL), improved, showing broad investor profitability. This rising profitability also signals a risk of demand exhaustion as more investors realize gains.
Parameters
- Spot RSI → Surged into overbought territory, indicating strong momentum.
- Spot CVD and Volumes → Weakened CVD and flat volumes, reflecting limited buyer conviction.
- Futures Open Interest & Perpetual CVD → Elevated participation and aggressive buy-side flows.
- Futures Funding Rates → Softer funding, suggesting reduced long demand and shifting sentiment.
- ETF Inflows → Significantly strengthened, indicating robust institutional demand.
- Profitability Metrics (NUPL, Realized P/L) → All rising, highlighting broad investor profitability.
Outlook
This insight suggests Bitcoin’s immediate future hinges on sustained demand to counteract emerging sell pressure. The market is in a delicate balance, benefiting from macro tailwinds but showing signs of exhaustion. Watch for a decisive increase in spot trading volumes or a sustained rise in funding rates as confirming signals of renewed bullish conviction. Conversely, a continued weakening of spot CVD alongside rising profit-taking could signal further downside.
Signal Acquired from → Glassnode Insights
