Bitcoin's Recovery Faces Renewed Sell Pressure and Underlying Fragility → Insights

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Briefing

Bitcoin’s market recently recovered to $116,000, driven by the anticipation of a Fed rate cut and robust institutional interest. However, this momentum is challenged by emerging sell pressure from various market segments. While US spot ETFs recorded significant net inflows, indicating strong institutional demand, the broader market shows signs of weakening spot flows and increased profit-taking, suggesting a fragile underlying structure that leaves Bitcoin vulnerable if demand does not sustain.

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Context

Many investors are currently wondering whether Bitcoin’s recent price rally is sustainable, or if the market is too fragile for continued upward movement. This data helps clarify the underlying forces at play, revealing a complex balance between macro-driven optimism and on-chain realities.

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Analysis

The spot market’s Relative Strength Index (RSI) surged into overbought territory, indicating strong buying momentum, yet the Cumulative Volume Delta (CVD) weakened and trading volumes remained flat. This suggests that while buyers were aggressive, there was limited conviction to sustain the rally as sellers actively absorbed demand. In the futures market, open interest increased with aggressive buy-side flows, but softer funding rates indicate reduced long demand, a shift towards caution despite active leverage. The options market saw growing open interest, but declining volatility spreads and skew point to less hedging and a more complacent investor tone.

This raises the risk of surprise if volatility returns. Crucially, US spot ETFs experienced significant net inflows, reinforcing cautious optimism from traditional finance investors, with the ETF Market Value to Realized Value (MVRV) climbing and keeping holders in profit. However, on-chain fundamentals were mixed; active addresses slipped to cycle lows, while transfer volume increased, suggesting capital flows continue despite quieter user activity. Fees also dipped, reflecting softer demand for block space and subdued speculative pressure.

Overall, profitability metrics, including supply in profit and Net Unrealized Profit/Loss (NUPL), rose, highlighting broad investor profitability. This elevated profit realization, coupled with weakening spot flows, points to emerging sell pressure and a potential demand exhaustion.

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Parameters

Bitcoin Price Recovery → Market recovered to $116,000
Observed Pattern → Renewed Sell Pressure
Core Data Point → Significant US Spot ETF Net Inflows
Spot Market Indicators → RSI overbought, CVD weakened, volumes flat
Futures Market Indicators → Rising open interest, softer funding rates
Options Market Indicators → Declining volatility spreads and skew
On-chain Activity → Addresses slipping, transfer volume increasing, fees dipped
Profitability Metrics → Supply in profit, NUPL, and realized P/L all rising

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Outlook

This insight suggests that the Bitcoin market is currently navigating a period of heightened sensitivity. While institutional capital continues to flow in, a lack of sustained spot conviction and increasing profit-taking from existing holders could cap upside momentum. Investors should watch for a sustained increase in spot trading volumes and a recovery in funding rates as a confirming signal of renewed, genuine demand. Conversely, a further decline in on-chain activity or significant outflows from ETFs would serve as a counter-signal, indicating that the current fragility is intensifying.