Author: Glassnode
Compiled by: AididiaoJP, Foresight News
Bitcoin's bottom is still being built, but its characteristics are quietly shifting. The capitulation selling by long-term holders is cooling off, buy-side demand has successfully absorbed the June lows, and the price is gradually recovering, challenging the zone that previously suppressed it.
Executive Summary
- The market has begun testing resistance levels above.
- Bitcoin's reaction to weak inflation data was much stronger than that of any major stock index, marking the most positive response to good news in weeks.
- Correlations with equities are loosening, while the inverse linkage with the dollar is deepening further – the current driver is liquidity, not risk appetite.
- Long-term holder selling – the primary source of selling pressure this year – has retreated from its peak.
- Profit-taking has drastically reduced. Buyers have fully absorbed the selling pressure at the June lows, diminishing the supply pressure faced on each subsequent rally.
- The Short-Term Holder cost basis is near $69,000, the break-even line for recent buyers, which will become 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 faced by Bitcoin this quarter is essentially a story of real rates, not risk-off. The 10-year real yield has climbed to around 2.4%, near the 2026 highs, and the dollar has held above its 200-day moving average since May. However, broader risk assets show no signs of strain: equities are near highs, credit spreads are low, and volatility remains moderate.
Bitcoin Leads the Rally
Following Tuesday's soft inflation data, Bitcoin posted larger gains than any other major asset. It jumped swiftly after the release, significantly outperforming US and European stocks for the week. After a month of sideways movement near lows, the market is once again reacting positively to good news.
This sensitivity is itself a signal: a market eager to rally on a single inflation report often indicates that sellers are exhausted, and buyers are just waiting for a reason.
Shift in Macro Drivers
Underneath the rally, Bitcoin's driving factors are changing. Its correlation with US stocks has been weakening since winter, while its inverse relationship with the dollar has deepened. Bitcoin is looking less like a proxy for stocks and more like an asset that strengthens when the dollar weakens.
It has not decoupled from the risk asset universe, but the dollar and liquidity channels now hold more sway than stock market sentiment. This is the channel most likely to transmit first if the macro environment loosens from here.
On-Chain Insights
Between Floor and Ceiling
The cost basis map precisely illustrates the current position. The Bitcoin price is above the network's average realized price – a natural floor in bear markets; yet it is below the Short-Term Holder cost basis (near $69,000) – the average entry price for buyers over the past five months. The current recovery is climbing towards this break-even resistance level, with a large number of trapped buyers waiting above.
The first touch of this level is likely to trigger a strong reaction, as those most inclined to sell are the ones about to break even. Successfully reclaiming it would open space for the recovery; rejection would reinforce the range-bound pattern.
Sellers Stop Taking Profits
The Long-Term/Short-Term Holder Realized Profit/Loss ratio indicator categorizes all on-chain selling into four types: veterans and newcomers, each selling at a profit or loss. For most of this cycle, selling by long-term holders at a profit dominated the selling flow. This flow has now nearly dried up completely; veterans are primarily selling at a loss.
Loss-selling by both cohorts now constitutes the main transactional signature on-chain, a typical late-bear signal. The crucial change is that the share of selling by long-term holders has stopped growing. The wave of selling pressure that has capped every rally this year is no longer expanding.
Capitulation Selling Begins to Cool
The rhythm of this capitulation is the most important current metric. The Entity-Adjusted Long-Term Holder Realized Loss metric filters out internal transfers, reflecting the actual volume that veterans are giving up each day. This metric hit a cycle peak two weeks ago; last week's report highlighted that its cooling was a prerequisite for any lasting recovery.
Now it has begun to recede. A single pullback doesn't prove exhaustion, and new shocks could restart selling. But in this cycle, it's the first time this core metric defining the bottoming process has shifted from rising to falling. The primary sellers driving this bear market are, at the margin, drying up.
Demand Absorbs Lows Selling
As veterans capitulated, buyers stepped in promptly. The Accumulation Trend Score, segmented by wallet size, shows a broad and strong wave of buying during the June lows, covering wallets from small to large. After prices stabilized, this intensity weakened, and the market entered a waiting mode.
The coins sold at the lows found buyers. Whether these buyers return with similar force in the next move will determine whether this bottom holds.
Off-Chain / Derivatives Insights
ETF Outflows Slow
US Spot ETFs tell a similar story of easing but unresolved pressure. Redemption pressure has significantly retreated from June's extreme levels, trending towards stabilization. However, the channel is not fully repaired: this week still saw one of the largest single-day outflows in several weeks, followed by a partial inflow the next day.
Until inflows truly return and hold steady, this remains a market where institutions have stopped fleeing but have not yet started buying.
Bears Throw in the Towel
Derivative markets have been moving in the opposite direction for weeks. The options put/call ratio has fallen to its lowest level this year, 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 unwinding.
But this unwinding hasn't translated into actual buying. Position adjustments by futures and options traders do not equate to capital entering the spot market, which is the clearest warning sign in the current recovery.
Panic Premium Eases
The premium for crash protection in the options market (measured via 25-Delta Skew) spiked during the June sell-off but has since consistently receded, now well below February's extreme levels. The cost of hedging each pullback is noticeably lower than a month ago.
Demand for protection still exists – as it should with unconfirmed lows – but the overall direction is normalizing.
Approaching Max Pain
Max Pain is the price at which the largest volume of open options expires worthless, and spot price has oscillated around it this year. Bitcoin is currently just below this level and challenging it for the first time in weeks.
Historically, reclaiming Max Pain often coincides with a shift to a more market-friendly environment, though the transition 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 into the options market.
Crash Protection Costs Decline
Absolute protection costs also confirm the easing trend. During the recovery, the price for one-month crash protection has steadily declined, indicating waning hedging demand. The market still pays a premium for downside protection, but significantly less 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 one-year lows, and the deep put pressure that erupted in February and June has faded from the volatility surface. Such compression rarely lasts; it's often the backdrop before the next decisive move begins.
Conclusion
A bottom is still being built, and this week it began to respond. Long-term holder capitulation has retreated from its peak, profit-taking has dried up, and the June lows were absorbed by broad-based buying. Bitcoin reacted more strongly to macro-positive news than other assets, is approaching Max Pain from below, and nearing the Short-Term Holder cost basis above – where the recovery will face its first real test.
Confirmation signals are still absent: ETF outflows have slowed but not reversed, derivative unwinding lacks spot follow-through, and compressed volatility awaits a catalyst. The key signal to change the view would be spot-driven buying that pushes price to effectively break through 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 trading.
The foundation is laid, but the follow-through has not yet arrived.
