Source: Glassnode; Compilation: Wuzhu, Golden Finance
Summary
Bitcoin has risen from $35,000 to a local new high of $104,000, supported by a significant increase in on-chain trading volume.
Especially in the $93,000 to $95,000 range, a significant amount of trading appears to have taken place, making this range a critical level for short-term support.
Off-chain spot capital flows have also turned positive, with strong net buying pressure from Coinbase and reduced selling pressure from Binance. This indicates that 'buying the dip' behavior still dominates at the two major exchanges.
ETF inflows peaked at $389 million/day on April 25, aiding in the rise of Bitcoin, but have since slowed to a more moderate $58 million/day.
The perpetual contract market appears to lag behind the spot market, as open interest is due to short squeezes, leading to many accounts betting on Bitcoin's rise being liquidated.
Strong demand in the spot market
Since hitting a low of $75,000 on April 9, the Bitcoin market has experienced a strong spot-driven rebound, with noticeable horizontal accumulation phases between each increase.
We can see this stair-step pattern in the cost basis distribution (CBD) heatmap, which shows clusters of supply accumulated at similar price levels over the past three months.
From this, we can see the accumulation mechanism formed before each rise, ultimately reaching $104,000 in the latest round of increases.
Over the past 30 days, we can also see a key accumulation area forming between $93,000 and $95,000. This range aligns closely with the cost benchmark of short-term holders (representing investors who entered the market over the past 155 days).
Therefore, if the market experiences a short-term pullback, this area is likely to become a strong support level, representing an area of value demand that investors may see again.
Positive bias in spot flows
In addition to these on-chain signals, off-chain order flow indicators can also provide valuable insights into market sentiment and biases. One such indicator is the cumulative trading volume delta (CVD), which tracks the net buying or selling pressure in the spot order book. We can assess the strength and directional bias of the spot market by studying this indicator on major trading platforms.
The chart below highlights the CVD indicators for Binance and Coinbase. Since mid-April, Coinbase has been in a continuous state of net buying, with CVD peaking at +$45 million daily, in line with the accelerated upward trend in the market. In contrast, the Binance market has shifted from strong net selling pressure of -$71 million daily in mid-March to a more moderate -$9 million daily now, reflecting a significant reduction in selling pressure.
The consistency between on-chain accumulation and off-chain spot demand helps to determine that the price rise to $104,000 is supported by genuine buying the dip activity. Ideally, the integration of buyer strength across these two dimensions will continue to play a role in maintaining a mid-term bullish outlook.
Measuring institutional investor interest
The participation of traditional investors in the Bitcoin market has been steadily increasing, especially since the launch of spot ETFs. Monitoring the inflows and outflows of these products can provide valuable perspectives on the sentiments, beliefs, and demands of institutional investors. Notably, on April 25, the weekly net inflow into ETF wallets peaked at $389 million/day, coinciding with a surge in spot-driven buying and supporting Bitcoin's price rise to $104,000. Since then, ETF inflows have decreased to about $58 million/day.
The fund flows of these ETFs indicate that institutional investor interest in Bitcoin remains relatively strong, with inflows comparable to the market rebound period before 2024.
Approaching the peak
With Bitcoin currently trading slightly below its historical high of $109,000, signs of excitement are beginning to re-emerge in the market. One of the most sensitive tools to track this transition is the short-term holder (STH) supply profit-loss ratio, which reflects changes in the sentiment of active investors.
This metric was particularly important during the retracement on April 7, when the ratio dropped to 0.03, indicating that nearly all STH holdings were at a loss. When the market hit a low of $76,000, it reached this level, after which the ratio soared above the key threshold of 9.0, meaning that over 90% of STH supply is now back in profit.
Generally speaking, high values may align with high-risk market conditions as investors begin to take profits. These conditions may persist for a while, but if new demand inflows slow, they typically precede profit-taking phases or the formation of local tops.
As long as this ratio remains well above the balanced level of 1.0, bullish momentum tends to be maintained. However, any sustained drop below this level may signal a significant shift in market forces, potentially leading to trend exhaustion.
Profit-taking begins, but there is still room for growth
Given that short-term holders (STH) currently hold unrealized profits, it is normal to expect an increase in profit-taking activity. Monitoring the behavior of this segment of the group is key to determining when demand exhaustion may approach near potential local tops.
Recently, the extent of profits realized by STH has surged to nearly +3 standard deviations above the 90-day average, reflecting a significant increase in profit-taking. During past cycles, especially when prices rose to historical highs, this indicator's historical peak has climbed above +5 standard deviations. This indicates that stronger profit-taking pressures are typically needed to overwhelm the inflow of demand.
Derivatives market performance lags behind
While the strong performance of the spot market is closely related to the recent rebound, traders in the derivatives market require more time to adjust. A more effective tool for gauging market sentiment in this area is the open interest (OI) of the perpetual contract market, priced in Bitcoin (BTC). Tracking weekly changes in OI across major platforms can provide insights into whether speculators are anticipating market trends or are surprised by them.
Since January 2025, this metric has shown its practicality in identifying points where investors feel surprised by market trends, often forcing them to liquidate positions. During the price drop below $80,000, the market experienced multiple instances of open interest (OI) contracting by over 10% weekly. This clearly indicates that as prices approached liquidation levels, overly leveraged long positions were forced to liquidate.
Interestingly, a similar situation occurred during the recent rebound that broke through $90,000, where open interest (OI) also showed a similar contraction, but this time the contraction suggests a short squeeze. Such volatility is characteristic of a healthy reset of derivatives positions and usually occurs in the early stages of new market trends. The emergence of such a squeeze indicates that this round of rebound has cleared excessive leverage, laying the foundation for a stronger upward trend.
As leveraged short positions were liquidated, the number of futures open contracts decreased by 10%, from 370,000 BTC to 336,000 BTC. This reduction gives us a rough idea of the scale of the squeeze. This process also lowers the likelihood of unhealthy deleveraging events occurring and may mitigate potential short-term price volatility.
The long positions in the perpetual contract market remain relatively light, which is another key signal that derivatives are catching up with the momentum of the spot market. The funding rates of major exchanges are one of the most effective tools for measuring these directional tendencies in the market; over the past few weeks, despite the bullish market sentiment, the funding rates have remained neutral.
As shown in the chart below, since late April, the average and individual funding rates have been steadily rising, currently hovering around 0.007 (annualized 7.6%). This increase reflects a positive shift, indicating that the perpetual contract market does not overly favor long exposure. Currently, the long leverage in the market appears limited, which is a healthy sign.
The options market is heating up
Options market data, particularly through the 1-month 25 Delta skew, can provide a supplementary perspective for observing market sentiment. The calculation for this indicator is the implied volatility (IV) of the 25 Delta put options minus the implied volatility of the 25 Delta call options. Therefore, negative skewness indicates that the price of call options is higher than that of put options, suggesting that traders are betting more aggressively on an upward trend, which is often a sign of underlying bullish sentiment.
Currently, the 25 Delta skew (1 month) has dropped to -6.1%, which indicates that the implied volatility of call options is significantly higher than that of put options. This reflects a clear shift in risk preference behavior, as options traders tend to speculate bullishly rather than hedge against downside risks.
While persistent negative skewness is not a clear signal in itself, it often aligns with a rise in market optimism, especially after a strong increase. To keep the options market in sync with bullish spot dynamics, we want to see this skew remain below or near neutral levels, thereby enhancing confidence in the strength of the rebound.
Conclusion
The rebound of Bitcoin back to historical highs is primarily driven by the spot market, underpinned by strong on-chain holdings and supportive off-chain capital flows. Demand seems to be mainly coming from large spot exchanges like spot ETFs and Coinbase. The emergence of a critical cost benchmark support near $95,000, coupled with a cooling of selling pressure, further enhances the strength of this upward trend.
However, the derivatives market seems to be catching up, with open interest and funding rates not yet fully aligning with the upward momentum of the spot market. The positions in the options market reflect a cautious but optimistic outlook, while the futures market currently shows almost no signs of excessive long leverage.
