Terrill Dicki
Aug 05, 2025 16:55
Bitcoin experiences a pause in its rally as market momentum cools across spot, futures, options, and ETF markets, signaling potential downside risks.
Bitcoin’s recent rally has hit a pause as momentum across various market sectors cools, according to Glassnode. This cooling trend is observed in the spot, futures, options, and ETF markets, suggesting a potential vulnerability for Bitcoin (BTC) as liquidity thins and risk appetite moderates.
Market Overview
As the market revisits the low-liquidity range beneath the $114,000 threshold, Bitcoin enters a recalibration phase. Both spot and futures markets exhibit signs of weakening, with the Relative Strength Index (RSI) dropping from 47.4 to 35.8, indicating oversold conditions. Additionally, the spot Cumulative Volume Delta (CVD) fell sharply from -$107.1 million to -$220 million, reflecting increased sell-side pressure. Spot trading volume also decreased from $8.4 billion to $7.5 billion, indicating reduced participation and liquidity.
In the futures market, open interest slightly declined from $45.6 billion to $44.9 billion, suggesting mild unwinding of positions. Long-side funding saw a significant reduction of 33%, falling to $3.1 million, pointing to a decrease in leveraged bullish demand. Perpetual CVD also dropped from -$1.2 billion to -$1.8 billion, highlighting aggressive distribution among traders.
Options and ETF Markets
The options market experienced an 8.4% contraction in open interest to $39.8 billion, indicating reduced speculative activity. The volatility spread narrowed from 23.84% to 16.26%, suggesting less risk being priced in. Conversely, the 25 Delta Skew increased to 5.51%, signaling heightened demand for downside protection and rising hedging sentiment.
ETF markets also showed signs of cooling, with net inflows dropping 24.9% to $269.4 million, well below the low band, indicating weak institutional demand. However, trading volume rose by 9.9% to $19.8 billion, pointing to a cautious yet responsive environment. ETF Market Value to Realized Value (MVRV) eased from 2.4 to 2.3, showing slightly lower profitability but ongoing unrealized gains.
On-Chain and Off-Chain Indicators
On-chain fundamentals provided mixed signals: active addresses increased by 3.6% to 729,000, while transfer volume decreased by 13.9% to $9.4 billion. Fees also declined by 14.4% to $483,200, indicating quieter network activity. Meanwhile, the Realized Cap Change remained elevated at 6.3%, reflecting strong but cooling capital inflows.
Off-chain indicators showed steady capital flows with the Short-Term Holder (STH) to Long-Term Holder (LTH) ratio at 17.3% and Hot Capital Share at 36.0%, indicating balanced liquidity. Profitability metrics cooled, as Percent Supply in Profit fell to 93.6%, Net Unrealized Profit/Loss (NUPL) dropped to 8.6%, and the Realized Profit/Loss Ratio contracted to 1.9, reflecting a more cautious sentiment.
In conclusion, the Bitcoin market is transitioning from a phase of euphoria to one of reassessment. While oversold conditions and seller exhaustion suggest a potential for a bounce, the market’s fragility remains, leaving it susceptible to negative external catalysts or delayed demand revival.
For further insights, visit the original analysis on Glassnode.
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