[Analysis] "Bitcoin buying momentum weakens…fear-driven hedging demand fades"

An analysis suggests that Bitcoin (BTC) buying momentum has weakened sharply in recent on-chain indicators.

In its weekly report released on the 4th (local time), on-chain analytics firm Glassnode said, "(Bitcoin’s) 30-day moving average Realized Profit has fallen by about 63%," adding that this "suggests a significant weakening in buy-side demand momentum." Glassnode noted that the "Percent of Supply in Profit" has also declined to around 57%, falling below the -1 standard deviation band, and said this "means the current market phase has entered a context similar to the early stages of the 2022 and 2018 bear markets."

The report suggests short-term upside is likely to be limited. Glassnode said, "The range-bound trading over recent weeks leaves room for a short-term rebound," but added that "the average cost basis for investors holding Bitcoin for one week to one month is formed around $70,000, and this zone could act as a 'strong overhead distribution zone,' likely limiting short-term gains." It added, "Spot market inflows remain low, but recent CVD (cumulative volume delta) trends show signs that selling pressure is gradually easing."

It also referenced indicators related to exchange-traded funds (ETFs) and derivatives. Glassnode said, "U.S. Bitcoin spot ETFs have recently turned to net inflows, suggesting the possibility of a gradual recovery in institutional demand," while noting that "positioning in the derivatives market remains defensive." It added, "The options market appears to be stabilizing after the volatility spike in February," and said, "Fear-driven hedging demand is declining and the market is moving into a more neutral volatility regime."