Bitcoin has found stability around the ~$70k mark, supported by renewed ETF inflows and reduced selling pressure. Nevertheless, modest spot trading volume and the presence of available supply overhead suggest that more robust demand is necessary to establish a lasting upturn.
Executive Summary
- Bitcoin stabilized following a significant downturn to approximately $67k, subsequently recovering towards $70k, though upward momentum remains uncertain.
- Unrealized losses have grown but are still within historical averages, indicating market stress rather than complete capitulation.
- A substantial block of Short-Term Holder supply is situated between ~$93k and $97k, forming a critical resistance zone overhead.
- Realized losses are still high but show no signs of panic, suggesting a controlled reduction of risk rather than a full capitulation.
- Spot trading volumes are low, with minimal increase during the recovery, implying weak confidence and selective purchasing on dips.
- Net flows into US Spot ETFs have turned slightly positive after consistent outflows, signaling early indications of renewed institutional engagement.
- Perpetual funding rates continue to be negative, reflecting ongoing short bias and cautious positioning in the derivatives market.
- Futures open interest remains relatively low, suggesting limited leverage growth supporting the price recovery.
- Options markets indicate stabilizing skew and implied volatility within a range, pointing to reduced demand for downside hedging.
- Dealer gamma positioning has shifted slightly positive, suggesting improved liquidity conditions and a more balanced market structure.
On-Chain Insights
Higher Lows, Heavy Ceiling
Despite ongoing global geopolitical tensions contributing to uncertainty in equity, energy, and commodity markets, Bitcoin has consistently established higher highs and higher lows since early March, forming a constructive pattern within the $60k–$70k price range.
If this resilience continues, it could lay a solid foundation for sustained growth over the long term. The Short-Term Holder Cost Basis Distribution Heatmap illustrates the concentration of recently acquired supply across different price levels, providing insight into potential supply or demand from newer market participants.
Within the current price range, a new accumulation zone is gradually forming. While modest in size, it is sufficient to account for the recent upward price movement. However, the significant concentration of short-term holder supply above $84k presents a more immediate concern for the medium term, as this group could amplify selling pressure if prices approach those levels or if the market experiences renewed stress.
The Mid-Term Range
Expanding on the supply dynamics previously discussed, the Realized Price Breakdown by Age Cohorts provides a more detailed perspective on the clustering of key cost basis levels among different investor segments. This metric tracks the average purchase price of coins, categorized by their holding duration, effectively mapping near-term support and resistance through investor behavior patterns.
Currently, the 1-week to 1-month cohort exhibits a cost basis of approximately $70.2k, representing the developing support floor. Concurrently, the 1-month to 3-month cohort is positioned at $82.2k, reinforcing the overhead resistance identified earlier.
These two levels collectively define the most likely range for medium-term price action. However, considering the still relatively small size of the current accumulation cluster, the support at $70.2k remains vulnerable, and the possibility of a decline below this level cannot be disregarded until a more substantial base of committed buyers is established.
Elevated Fear, No Capitulation
Shifting focus from specific cost basis levels to a broader cyclical view, profit and loss indicators offer insight into the market’s balance of greed and fear. The Relative Unrealized Loss metric quantifies the aggregate dollar value of unrealized losses held by all investors as a proportion of total market capitalization, serving as an indicator of latent selling pressure and prevailing market sentiment.
Over the past two months, this metric has remained above 15% of market cap, a pattern similar to conditions observed in Q2 2022. This suggests current sentiment is characterized by elevated fear, yet it falls significantly short of the extreme capitulation levels seen during severe downturns like the FTX collapse. Historically, resolving this degree of embedded loss typically requires either time, further price declines, or a combination of both. A rapid V-shaped recovery remains a theoretical possibility, but given the current extent of unrealized losses, it would necessitate a substantial and sustained infusion of new capital within a short period.
Profit Flows Running Dry
Exacerbating the elevated unrealized fear, realized profitability has experienced a consistent and substantial decrease since Q4 2025, providing further evidence of demand exhaustion.
The Entity-Adjusted Realized Profit, smoothed by a 7-day SMA, effectively filters out internal exchange transfers to offer a clear measure of genuine profit-taking activity across the network. This metric has plummeted from a peak of around $3 billion daily in July 2025 to below $0.1 billion daily currently, representing a decline of over 96%. Such significant contractions are characteristic of a bear market entering its later phases, where the pool of profitable sellers has largely diminished and on-chain liquidity reaches cyclical lows. While this scenario reduces immediate selling pressure, it also signifies a lack of new capital inflows necessary to sustain any meaningful recovery.
Off-Chain Insights
Spot Volume Remains Subdued
Activity in the spot market remains relatively muted following the sharp decline to the $67k region, with aggregate exchange volumes showing only a modest reaction during the subsequent recovery. While a few brief surges are visible, they appear to be reactive rather than indicative of a sustained return of conviction-driven buying.
Compared to the stronger engagement observed during previous upward price movements, current spot volumes are low. This suggests that the rebound towards $70k has thus far been supported more by selective dip-buying and short-term adjustments than by a widespread resurgence of spot demand.
The discrepancy between the stabilizing price action and the subdued spot participation indicates a market still in a phase of rebalancing. Until spot activity shows more consistent expansion, the upward price movement may remain somewhat fragile, with price action likely more susceptible to derivatives flows and shifts in liquidity conditions than to robust organic accumulation.
ETF Flows Rebound
Following a prolonged period of net outflows, US spot ETF flows are beginning to show signs of improvement, with the 7-day moving average turning modestly positive in recent sessions. This suggests that institutional demand may be starting to return as Bitcoin stabilizes and recovers from its recent dip to the $67k level.
While the volume of inflows is currently small compared to previous accumulation phases, the change in direction is noteworthy. Earlier outflows coincided with deteriorating price action and weaker sentiment, whereas the recent upturn in flows indicates a tentative recommitment from traditional market participants.
This shift is significant because ETF demand has become a key source of support for the spot market in this cycle. A sustained return to positive net inflows would suggest that institutional investors are regaining confidence and are beginning to increase their exposure once again.
For the moment, the recovery is in its early stages and remains modest, but the reversal in flows represents a constructive development in market structure compared to the consistent distribution observed in recent weeks.
Negative Funding Persists
Perpetual futures funding rates continue to remain in negative territory, even as Bitcoin stabilizes and attempts to recover from its recent price decline. This indicates that short positions still predominate, with traders willing to pay a premium to maintain exposure to potential downside.
The persistence of negative funding highlights a cautious derivatives market environment, where market participants seem hesitant to aggressively re-establish long positions despite improving price structure. This contrasts with previous recovery periods, where funding rates typically normalized or turned positive as sentiment improved.
From a positioning standpoint, sustained negative funding could potentially support prices by reflecting an overcrowded short bias that might be vulnerable to short squeezes if upward momentum continues. However, it also signals that confidence in the recovery remains limited, particularly among leveraged traders.
The current situation suggests a market where derivatives positioning remains defensive, with risk leaning towards short exposure despite emerging signs of stability in spot and ETF flows.
ATM Implied Volatility: Range-Bound and Waiting
Examining the options market, BTC’s at-the-money implied volatility mirrors spot market behavior, exhibiting a range-bound and mean-reverting pattern. The short end of the curve remains most sensitive to macroeconomic developments and short-term news. While the 1-week tenor shows higher reactivity, it continues to trade within a relatively narrow range between the low 50s and high 50s. Further out the curve, implied volatility remains compressed below 50%, with minimal dispersion across different maturities.
This general compression suggests that the market is awaiting a new catalyst to re-price risk in either direction. The contained levels in longer-dated tenors indicate that there is no fundamental shift in long-term risk at this time, but rather short-term adjustments influenced by front-end activity. In this environment, volatility is being employed tactically to navigate immediate uncertainty rather than to express a long-term outlook.
25 Delta Skew: Downside Protection Still Dominates
As volatility temporarily increased this week, skew widened towards puts, confirming that the repricing was driven by demand for downside protection.
The 25 delta skew, which measures the relative cost of puts versus calls with the same delta, rose to approximately 18% to 19% for the 1-week and 1-month tenors when BTC traded below 68K earlier in the week. This indicates a clear rise in demand for short-term downside insurance as soon as prices weakened, particularly amidst elevated geopolitical uncertainty.
Since then, skew has moderated but remains elevated and tightly grouped across maturities, ranging between 10% and 12%. This compression across the curve suggests that the preference for downside protection is not confined to the front end but reflects a consistent and widespread hedging bias among market participants.
Skew Index Shows a Different Tone
Adding another perspective to the options market analysis, the skew index provides a more nuanced signal compared to the 25 delta skew. As it is weighted towards low-delta options, it reflects pricing across the entire spectrum of the distribution. While the one-week and one-month readings remain in put territory, the three-month and six-month values, approximately 2.4% and 7.4% respectively, shift into call territory, as the index is calculated as calls minus puts.
This creates a distinct divergence. While the 25 delta skew suggests a bearish bias across all maturities, the longer-dated skew index indicates that upside variance is being priced more favorably than downside risk further out on the curve. In practice, this implies that deep out-of-the-money downside protection is not being aggressively acquired in longer tenors, even as mid-delta puts continue to be supported. The surface appears to reflect short-term caution, but a more balanced to mildly constructive sentiment in the longer-term, a pattern frequently observed in crypto markets where far out-of-the-money calls are used to capture asymmetric upside potential.
Dealer Gamma: Expiry Set to Reset Market Structure
Friday, March 27th, marks a weekly, monthly, and quarterly expiry, a configuration that typically exerts considerable influence on BTC price movements. As the options market continues to grow, dealer hedging activities are becoming increasingly important in shaping short-term price dynamics. With less than 48 hours until expiry, market makers are positioned within a short gamma corridor, primarily between 70K and 75K. Within this range, prices can accelerate rapidly in either direction, especially under conditions of relatively low liquidity.
What stands out is the substantial volume of positioning scheduled to expire. Approximately $10 billion in dealer short gamma is set to roll off, effectively removing a key mechanical driver of price action. Once this positioning unwinds, the market is likely to become less constrained by hedging flows and more responsive to external factors. In this scenario, broader macroeconomic conditions are expected to play a more significant role in determining Bitcoin’s next equilibrium point.
Conclusion
Bitcoin is beginning to exhibit some positive signals following a sharp corrective phase, with price stabilizing, ETF inflows improving, and derivatives positioning becoming more balanced. The selling pressure that characterized the recent downturn appears to be easing, and the market is starting to appear more balanced than it did a week ago.
However, this does not yet indicate an environment of high-conviction breakout. Spot trading volume remains relatively subdued, open interest is low, and a significant block of overhead supply continues to loom above the market. In other words, while the conditions are improving, stronger participation is likely required to transform this into a more durable uptrend.
For now, the market structure appears more constructive than outright bullish. An opportunity is developing if demand continues to increase, but a more convincing expansion in spot volume and capital inflows will likely be necessary to confirm that this recovery possesses genuine underlying strength.
Based on materials from : insights.glassnode.com