By: Glassnode
Compiled by: AididiaoJP, Foresight News
The bottom for Bitcoin is still under construction, but its characteristics are quietly changing. The capitulation selling by long-term holders is starting to cool, buy orders successfully absorbed the June lows, and the price is gradually recovering, challenging the area that previously suppressed it.
Executive Summary
- The market has begun testing the resistance above.
- Bitcoin's reaction to weak inflation data was much stronger than any major stock index, the most positive response to good news in weeks.
- Correlation with equities is loosening, while the inverse link with the dollar is deepening – the current driver is liquidity, not risk appetite.
- Selling by long-term holders – the primary source of selling pressure this year – has retreated from its peak.
- Profit-taking behavior has decreased significantly. Buy orders have completely absorbed the selling at the June lows, reducing the supply pressure faced by each rally.
- The cost basis of short-term holders is near $69,000, the breakeven line for recent buyers, which will be the next significant resistance; a strong reaction is expected there.
- Derivative traders are unwinding bearish positions, but spot buying has not yet followed, which is the missing link in the current recovery.
Macro Insights
The pressure on Bitcoin this quarter has been essentially a real rate story, not risk-off. The 10-year real yield has risen near its 2026 high of around 2.4%, and the dollar has stayed above its 200-day moving average since May. However, broader risk assets show no stress: equities are near highs, credit spreads are low, and volatility remains modest.
Bitcoin Leads the Rebound
Following Tuesday's soft inflation data, Bitcoin rallied more than any other major asset. It jumped immediately after the data release, significantly outperforming US and European stocks for the week. After a month of sideways movement at lower levels, the market is once again responding positively to good news.
This sensitivity is itself a signal: a market eager to rise on just one inflation report often indicates that sellers are exhausted and buyers are just waiting for a reason.
A Shift in Macro Drivers
Underneath the rebound, Bitcoin's drivers are changing. Since winter, its correlation with US stocks has been weakening, while its inverse relationship with the dollar has been deepening. Bitcoin is acting less like an equity proxy and more like an asset that strengthens when the dollar weakens.
It hasn't detached from the risk asset universe, but the dollar and liquidity channels now exert more influence than stock market sentiment. If the macro environment loosens from here, this channel is most likely to be the first to transmit it.
On-Chain Insights
Between Floor and Ceiling
The cost basis map accurately depicts the current position. The Bitcoin price is above the network-wide average Realized Price – the natural floor support in bear markets; and below the Short-Term Holder cost basis (near $69,000) – the average entry price of buyers over the past five months. The current recovery is climbing towards this breakeven resistance level, with many trapped buyers waiting above.
The first touch of this level is likely to trigger a strong reaction, as the group most inclined to sell is precisely those about to break even. Successfully reclaiming it would open space for the recovery; rejection would confirm the continuation of the range-bound pattern.
Sellers Stop Taking Profits
The Long-Term / Short-Term Holder Realized Profit/Loss Relative metric categorizes all on-chain selling into four types: veterans and newcomers, each selling while in profit or loss. For most of this cycle, profit-taking by long-term holders dominated selling. Now this flow has almost completely dried up; the old hands are now selling mostly loss-making positions.
Loss-making sales from both groups constitute the main on-chain transaction characteristic, a typical late-bear-market signal. The key change is that the proportion of selling by long-term holders has stopped growing. The wave of selling pressure that met every rally this year is no longer expanding.
Capitulation Selling Begins to Cool
This capitulation pace is the most important current indicator. The Entity-Adjusted Long-Term Holder Realized Loss metric filters out internal transfers, truly reflecting the amount old hands actually give up each day. This metric hit its cycle peak two weeks ago. In last week's report, we clearly stated that the cooling of this indicator is a prerequisite for any lasting recovery.
It has now begun to decline. One pullback doesn't prove complete exhaustion, and new shocks could restart selling. But in this cycle, it's the first time the core indicator defining the bottoming process has turned from rising to falling. The main sellers driving this bear market are drying up at the margin.
Demand Absorbs Low-Point Selling
As the old hands capitulated, buyers stepped in promptly. The Accumulation Trend Score by wallet size shows a broad and strong wave of buying during the June lows, covering wallets from small to large. After price stabilization, this intensity weakened, and the market entered a wait-and-see mode.
The coins sold at the lows found takers. Whether these buyers return with equal force in the next move will determine if this bottom can hold.
Off-Chain / Derivatives Insights
ETF Outflows Slow
US spot ETFs tell the same story of easing but unresolved pressure. Redemption pressure has retreated significantly from June's extreme levels, trending towards stabilization. However, the channel is not fully repaired: a day this week still saw the largest single-day outflow in weeks, followed by partial recovery the next day.
Until inflows truly return and stabilize, this remains a market where institutions have stopped fleeing but not yet started buying.
Bears Abandon Resistance
Derivatives markets have been moving in the opposite direction for weeks. The options put/call ratio has dropped to its yearly low, with traders letting bearish protection expire; perpetual funding rates are only slightly above neutral, far from crowded long levels. Bearish bets are quietly and steadily exiting.
But this unwinding hasn't brought actual buying. Position adjustments by futures and options traders are not equivalent to capital entering the spot market, which is the clearest caveat in the current recovery.
Panic Premium Eases
The premium for crash protection in the options market (measured by 25-Delta Skew) surged during the June sell-off and has been declining since, now well below February's extreme levels. The cost of hedging each pullback is significantly lower than a month ago.
Protection demand still exists – as it should when lows are unconfirmed – but the overall direction is normalizing.
Approaching Max Pain
Max Pain is the price at which the largest share of open options expire worthless. The spot price has oscillated around it all year. Bitcoin is currently just below it, challenging it for the first time in weeks.
Historically, reclaiming Max Pain has often coincided with a market turn towards a friendlier environment, though the shift takes time. A clean break above this level would be the first structural signal of an upside breakout from the range; rejection would confirm the cautious sentiment still priced by options markets.
Crash Protection Costs Decline
Absolute protection costs also confirm the easing trend. Throughout the recovery, the one-month crash protection price has steadily declined, with hedging demand weakening. The market still pays a premium for the downside, but far lower than at the lows.
Volatility Enters a Calm Period
A longer-term view shows how calm the market has become. The Bitcoin Volatility Index (DVOL) is near yearly lows, and the deep put pressure that erupted in February and June has faded from the volatility surface. Such compression rarely lasts; it is often the backdrop before the next decisive move begins.
Conclusion
The bottom is still under construction, and this week it started responding. Long-term holder capitulation has retreated from its peak, profit-taking has dried up, and the June lows were absorbed by broad buying. Bitcoin reacted more strongly to macro good news than other assets, is approaching Max Pain from below, and is nearing the Short-Term Holder cost base above – which will be the first real test for the recovery.
Confirmation signals are still absent: ETF outflows have slowed but not reversed, derivative unwinding lacks spot follow-through, volatility compression awaits a catalyst. The key signal for a change in judgment is spot-driven buying pushing the price to effectively break and hold above the Short-Term Holder cost basis. If long-term holder losses accelerate again, or if price is pushed back near the Realized Price, the market will return to range-bound action.
The foundation is laid; the follow-through has yet to arrive.
