According to analysis, the characteristics of Bitcoin's bottom formation have undergone a qualitative change. The capitulation-style selling by long-term holders has notably cooled, with buy-side demand successfully absorbing the June lows, and the price is now challenging a previously suppressive zone.
Analysts point out that the current driving factors have shifted from risk appetite to US dollar liquidity, with the market gradually moving out of the deepest waters of the bear market. Data shows that, despite a still complex macro environment, initial signs of selling exhaustion are emerging. Bitcoin is attempting to find a new equilibrium against a backdrop of a weakening US dollar. This shift marks a transition in market sentiment from extreme pessimism towards cautious repair, though a true reversal requires confirmation from more signals.
The reaction to macro data reveals a loosening in Bitcoin's correlation with the stock market. The mild inflation data released on Tuesday triggered a Bitcoin rally that far outpaced major stock indices, representing the most positive response to good news in weeks. The 10-year real yield has climbed to around 2.4%, near 2026 highs, and the US dollar has remained above its 200-day moving average since May. However, broader risk assets show no signs of stress: US and European stocks are near highs, credit spreads are low, and volatility remains subdued. This divergence suggests Bitcoin is no longer acting purely as a proxy for stocks but is forming a deeper inverse correlation with a weakening dollar.
After a month of sideways movement at lower levels, the market's sensitivity to positive news has significantly increased. A rally triggered by a single inflation report often indicates that sellers are exhausted and buyers are merely waiting for a reason. If the macro environment eases from here, the dollar and liquidity channels would be the first to transmit the impact, potentially pushing the price to break out of the current range.
On-chain cost structures clearly depict the market's current position. The Bitcoin price is above the network-wide average realized price, a natural bottom support in bear markets, but below the cost basis of short-term holders (near $69,000), which is the average entry price for buyers over the past five months.
The relative realized profit/loss indicator for long-term versus short-term holders shows that for most of this cycle, profit-taking sales by long-term holders dominated the sell-side. This flow has now almost completely dried up, with veterans currently selling mostly at a loss. Loss-making sales from both groups constitute the primary on-chain transaction characteristic, a typical late-bear-market signal.
The entity-adjusted realized loss metric for long-term holders hit a cycle peak two weeks ago. Last week's report explicitly stated that cooling in this metric is a prerequisite for a sustained recovery; it has now begun to decline.
The accumulation trend score, segmented by wallet size, shows a broad and strong wave of buying during the June lows, covering small to large wallets. The intensity has weakened since the price stabilized, with the market entering a waiting mode.
The first touch of the $69,000 break-even line is likely to trigger a strong reaction, as the group most inclined to sell are those about to recoup their costs. A successful reclaim would open space for recovery, while a rejection would see the range-bound pattern continue.
Institutional fund flows and derivatives market sentiment show a divergent picture. Selling pressure on US spot ETFs has significantly retreated from June's extreme levels, trending towards stabilization. However, a single day this week still saw the largest daily outflow in weeks, followed by a partial recovery the next day. Until inflows genuinely return and stabilize, this remains a market where institutions have stopped fleeing but have not yet begun buying.
The derivatives market has been moving in the opposite direction for weeks. The put/call ratio for options has dropped to its lowest level this year, with traders letting bearish protection expire. Perpetual swap funding rates are only slightly above neutral, far from crowded long levels. Bearish bets are quietly and steadily unwinding, but this unwinding has not translated into actual buying. Position adjustments by futures and options traders do not equate to capital entering the spot market, which is the clearest caution for the current recovery attempt.
The premium for crash protection in the options market, measured by the 25-Delta Skew, spiked during the June sell-off and has been declining since. It is now well below February's extreme levels, with the cost of hedging each pullback significantly lower than a month ago.
The Maximum Pain point is the price at which the largest portion of open options would expire worthless. This year, the spot price has oscillated around it. Bitcoin is currently below this level but, for the first time in weeks, is making a move towards it. Historically, reclaiming the Maximum Pain point has often coincided with a shift to a more favorable market environment, though the transition takes time.
The Bitcoin Volatility Index is near one-year lows. The deep put pressure that erupted in February and June has faded from the volatility surface. Such compression is rarely sustained and often serves as the backdrop before the next decisive market move.
The conditions for a confirmed bottom are not yet fully met. This week, long-term holder capitulation has receded from its peak, profit-taking has dried up, the June lows were absorbed by broad buying, and Bitcoin's reaction to macro-positive news is stronger than other assets. It is approaching the Maximum Pain point from below and is near the short-term holder cost basis above it.
That area will be the first real test for recovery, but confirming signals are still absent: ETF outflows have slowed but not reversed, derivatives unwinding lacks spot market follow-through, and compressed volatility awaits a catalyst. The key signal for a change in outlook would be spot-driven buying that effectively pushes the price above and holds the short-term holder cost basis.
If long-term holder losses accelerate again, or if the price is pushed back near the realized price, the market will revert to a range-bound pattern. The foundation has been laid, but the follow-through has not yet arrived. The market stands at a crossroads between range-bound consolidation and a trend breakout, awaiting the next decisive catalyst.
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