Bitcoin [BTC] is beginning to regain demand. This comes after weeks of persistent selling pressure weakened participation across both spot and derivatives markets.
Over the past week, the 30-day cumulative demand rebounded sharply from nearly -500,000 BTC to around -75,000 BTC. This shift signaled that risk appetite is gradually returning.
Notably, futures demand recovered from roughly -295,000 BTC to slightly above neutral. Despite that, spot demand remained weak near -78,000 BTC, showing long-term investors are still waiting for stronger confirmation. Moreover, that divergence suggests traders are positioning for higher prices before meaningful capital enters the spot market.
Although sentiment has clearly improved, Bitcoin’s recovery will remain vulnerable until spot accumulation strengthens, reinforcing derivatives-driven momentum with broader investor conviction.
Downside fears begin to ease
Bitcoin’s options market nuances cautious spot participation, although investors are no longer pricing downside risk as aggressively compared to the previous sell-offs.
During the February and June selloffs, put implied volatility surged as traders rushed to hedge against deeper losses. July presents a different picture. In contrast, in July, as Bitcoin traded between $60,000 and $65,000, downside premiums have cooled noticeably.
Such a divergence indicates that expectations are shifting from another capitulation toward a slower bottoming process.
This shift reflects a market that has already experienced significant declines over several months. As a result, reducing the urgency for costly downside protection. Even so, investors should be cautious since calmer options pricing does not necessarily translate to renewed conviction.
Additionally, ETF participation remains inconsistent while spot accumulation has fallen behind derivative demand. Therefore, until fresh capital flows back into spot markets, improved sentiment could face challenges in generating widespread buying needed for a durable recovery.
Distribution remains a market headwind
Even as downside fears continue easing, Bitcoin’s recovery is still meeting resistance from holders taking profits accumulated during the previous cycle. Long-term holder realized losses remain elevated on the 30-day Moving Average, although they have moderated from the extreme spikes recorded during the 2022 bear market.
Meanwhile, realized profit and loss data shows short-term holders continue accounting for a larger share of market activity, reflecting uncertainty among newer investors as prices stabilize.
That combination suggests supply is gradually rotating from experienced holders to fresh participants rather than disappearing altogether. Furthermore, an increase in demand for bitcoin is absorbing most of the distribution of supply.
However, until long-term holder selling slows further, Bitcoin’s recovery is likely to remain gradual instead of accelerating into a sustained bullish trend.
Final Summary
- Bitcoin recovery remains incomplete as spot demand continues trailing derivatives activity.
- BTC still faces long-term holder selling despite easing downside fears and improving market sentiment.
