[Analysis] Bitcoin Selling Pressure Eases, But Bullish Turn Still Unconfirmed

Bitcoin's on-chain selling pressure and overheated leverage are easing, but it is still too soon to confirm a full bullish turn, according to a CryptoQuant analysis.

CryptoQuant contributor CoinNiel wrote on August 16 that Bitcoin exchange netflows plunged to 29 BTC from 3,507 BTC on August 14, signaling that immediate selling pressure is falling sharply.

An increase in Bitcoin flowing to exchanges is generally interpreted as a rise in coins available for sale. By contrast, shrinking net inflows can signal that potential selling pressure is easing.

Excess in the derivatives market is also cooling. Bitcoin funding rates dropped to 0.00465 from 0.0228, while open interest slipped to about $22.94 billion from about $23.11 billion.

CoinNiel said that shows crowded long positions are cooling noticeably. Even so, open interest remains relatively high, suggesting market leverage has not been fully unwound.

The exchange stablecoin ratio also remains slightly above its 30-day average. As a result, exchange netflows and shifts in derivatives positions need to be assessed together when judging liquidity conditions.

CoinNiel said the market is moving in a neutral direction rather than shifting decisively to strong buying dominance. Lower exchange inflows and normalized funding rates are positive signs, but the recent easing in risk could weaken if netflows, funding rates and open interest rise together again.

He identified a move to negative exchange netflows as the key signal to confirm Bitcoin's next bullish turn. If Bitcoin records net outflows from exchanges while funding rates remain stable, that would provide a stronger sign that selling pressure has eased and that further gains could follow.