James Ding
Mar 24, 2025 10:07
Bitcoin remains vulnerable to downward pressure due to tight liquidity conditions and weak investor sentiment, with ETF outflows and cautious market behavior persisting.
Bitcoin (BTC) appears to be facing ongoing downward pressure as liquidity inflows remain weak, according to a recent report by Glassnode. The analysis highlights that while some speculative activity persists, the broader cryptocurrency market maintains a defensive stance.
Market Overview
The report indicates that tight liquidity conditions and weakening investor sentiment are key factors contributing to the current market dynamics. Despite some resilience in spot market activity, with price momentum stabilizing and perpetual contract volume delta (CVD) turning positive, overall market participation remains subdued. Spot volumes and CVD have seen a multi-week contraction, reflecting reduced buying interest and cautious market behavior.
Exchange-traded fund (ETF) markets are also under scrutiny, with sustained outflows and trading volumes approaching statistical lows. This trend suggests ongoing institutional de-risking, although the intensity of outflows has slowed.
Derivatives and On-Chain Activity
In the derivatives market, signals are mixed. While futures open interest has stabilized after recent declines, funding rates have dropped significantly below their statistical bands, indicating weak demand for leveraged long positions. Conversely, options market activity is on the rise, with volatility spreads remaining low and 25 Delta Skew exceeding statistical highs, signaling increased downside risk hedging among investors.
On-chain metrics paint a similarly cautious picture. Active addresses, transfer volumes, and fee revenues continue to decline, suggesting lower network participation and shrinking capital inflows. Liquidity metrics echo this trend, with realized cap growth slowing and the share of hot capital diminishing, pointing to a more cautious investor stance.
Profitability metrics have also deteriorated, with the percentage of supply in profit and the Net Unrealized Profit/Loss (NUPL) nearing levels that could heighten investor stress and the risk of forced selling.
Conclusion
Overall, despite some speculative activity, the market’s defensive posture is reinforced by ETF outflows, weakening on-chain fundamentals, and increased demand for downside protection in options markets. This environment suggests that Bitcoin may remain vulnerable to further downward pressure unless there is a significant resurgence in liquidity inflows.
For the complete analysis, please refer to the original report on Glassnode.
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