Crypto Market Faces Intensifying Pressure: Unpacking Bitcoin's Downward Spiral and Exploring the Road Ahead

According to the latest data published by Glassnode, the short-term outlook for the Bitcoin market continues to weaken. The company stated that Bitcoin is trading around $71,300 and that downside risks are prominent due to both increasing selling pressure in the spot market and accelerating ETF outflows. The analysis added that the market structure is currently stable, but momentum is downward in the short term.

As you know, Strategy announced today that it had conducted a symbolic Bitcoin sale. However, on-chain data shows that network activity remains strong. Transfer volume increased by 31 percent weekly to $4.6 billion, while revenue from transaction fees rose by 17 percent.

However, Glassnode noted that this activity stemmed from the transfer of existing capital, not from new capital inflows. The 57% drop in monthly market capitalization, bringing it almost to zero, indicated a significant slowdown in new money inflows into the market. It was also noteworthy that the number of active addresses remained relatively flat at around 607,000. It was stated that selling pressure also increased significantly in spot markets. The cumulative volume difference (CVD) indicator fell sharply from positive $16 million to negative $6.9 million, a 143% reversal. This indicates that buyers have withdrawn and price discovery has passed into the control of sellers. Although trading volume increased by 8%, it was noted that the increased volume was due to selling rather than buying transactions.

In derivatives markets, investors appear to be becoming more cautious. While the size of open positions in futures remained flat at $36.7 billion, the 26% increase in the cost of carrying long positions revealed that bulls are paying a higher price to maintain their bullish expectations. The CVD indicator in perpetual futures also continued to deepen into negative territory.

While the total open interest in the options market decreased by $2.3 billion, the 25-delta skew indicator falling from approximately 15% to 12% suggests a slight decrease in demand for downward hedging. Nevertheless, the high volatility spread of 24% indicates that investors expect price fluctuations to continue.

According to Glassnode, the most striking data point of the week was the outflows from spot Bitcoin ETFs. Net ETF outflows nearly doubled to $1.3 billion, while trading volume increased by 78% to $10.9 billion. The analysis noted that institutional investors not only reduced their positions but also did so rapidly and on a large scale. The MVRV ratio, an indicator of profitability for ETF investors, being at 1.25 suggests that the average ETF investor has a limited profit margin.

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Profitability indicators also confirm market pressure. The percentage of Bitcoin supply in profit fell from 61.5% to 59.8%, while the realized profit/loss ratio dropped to -0.9, indicating that losses have become more dominant than profits in on-chain transactions. The rise in net unrealized losses to 4.1% reveals that a significant portion of investors who bought recently have incurred losses.

Glassnode’s assessment states that Bitcoin is currently in a distribution and consolidation phase, noting that while on-chain activity appears structurally healthy, new capital inflows have stalled, selling pressure in spot markets has increased, and institutional investors continue to exit the market through ETFs. According to the company, until market capitalization growth accelerates again and the spot CVD indicator turns positive, the most likely scenario for Bitcoin will remain sideways or downward price movements.

*This is not investment advice.