Source: Glassnode; Compiled by: Wuzhu, Golden Finance
Summary
Bitcoin has risen from $35,000 to a local new high of $104,000, driven by a significant increase in on-chain trading volume.
Particularly in the $93,000 to $95,000 range, a large number of trades seem to have been executed, and this range has now become a key level of short-term support.
Off-chain spot funding flows have also turned positive, with strong net buying pressure from Coinbase, while selling pressure from Binance has diminished. This indicates that 'buying the dip' behavior remains dominant across the two major exchanges.
ETF inflows peaked at $389 million/day on April 25, helping to drive Bitcoin's rise, but have since slowed to a more moderate $58 million/day.
The perpetual contract market appears to lag behind the spot market, as outstanding contracts have been liquidated due to short squeezes, leading to the closure of many accounts betting on Bitcoin's rise.
Strong spot demand
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 rise.
We can see this step-like pattern in the Cost Basis Distribution (CBD) heatmap, which shows the supply clusters accumulated at similar price levels over the past three months.
From this, we can see the accumulation mechanism formed before each rally, ultimately reaching $104,000 in the latest round of increases.
Over the past 30 days, we can also see a key accumulation area between $93,000 and $95,000. This range closely aligns with the cost basis 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 a region where investors may again see demand for value.
Positive deviation in spot flows
In addition to these on-chain signals, off-chain order flow indicators can also provide valuable insights into market sentiment and deviations. One such indicator is the cumulative trading volume delta (CVD), which tracks 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 across major trading platforms.
The chart below highlights the spot CVD indicators for Binance and Coinbase. Since mid-April, Coinbase has been in a continuous net buying state, with CVD peaking at +$45 million daily, consistent with the market's accelerating upward trend. In contrast, the Binance market has shifted from a strong net selling pressure of -$71 million daily in mid-March to a more moderate -$9 million daily now, reflecting a significant decrease in selling pressure.
The consistency between on-chain accumulation and off-chain spot demand helps to determine that the upward trend to $104,000 is supported by genuine buy-the-dip activity. Ideally, the convergence of buyer strength across these two dimensions will continue to play a role in sustaining 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 average net inflow of ETF wallets peaked at $389 million/day, coinciding with a surge in spot-driven buying, 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 investors' interest in Bitcoin remains relatively strong, with inflows comparable to those during the market rebound period prior to 2024.
Approaching peak
With Bitcoin currently trading slightly below its historical high of $109,000, signs of excitement are beginning to reappear in the market. One of the most sensitive tools for tracking this shift is the short-term holder (STH) supply profit-loss ratio, which reflects changes in the sentiment of active investors.
This indicator was particularly important during the pullback on April 7, when the ratio dropped to 0.03, indicating that nearly all supplies held by short-term holders were at a loss. The market reached this level when it hit a low of $76,000, after which the ratio soared above the key threshold of 9.0, indicating that over 90% of short-term holder supplies are now back in profit.
In general, high values may correspond to high-risk market conditions as investors begin to take profits. These conditions may persist for a while, but if new demand inflow slows, they usually precede the profit-taking phase or the formation of local tops.
As long as this ratio remains far above the equilibrium level of 1.0, bullish momentum tends to be sustained. However, any continued drop below this level could signal a significant shift in market forces and potential trend exhaustion.
Profit-taking begins, but there is still room for growth
Given that short-term holders (STH) currently hold unrealized gains, it is normal to expect an increase in profit-taking activity. Monitoring the behavior of this group during rebounds is key to assessing when demand exhaustion may approach a potential local top.
Recently, the degree of profit-taking by short-term holders has surged to nearly +3 standard deviations above the 90-day average, reflecting a significant increase in profit realization. During past cycles, especially when prices rose to historical highs, the historical peak of this indicator had climbed to over +5 standard deviations. This indicates that stronger profit-taking pressure is typically needed to overwhelm the inflow of demand.
Derivatives market lagging
While the strong performance of the spot market is closely related to recent rebounds, the time it takes for derivatives market traders to adjust is longer. A more effective tool for measuring market sentiment in this field is the outstanding contracts (OI) in the perpetual contract market, priced in Bitcoin (BTC). Tracking the weekly changes in outstanding contracts (OI) across major platforms can provide insights into whether speculators are anticipating market movements or are caught off guard.
Since January 2025, this indicator has demonstrated its practicality in identifying points where investors are caught off guard by market movements, often forcing them to liquidate positions. During the period when prices fell below $80,000, the market experienced several weeks of outstanding contracts (OI) contracting by over 10%. This clearly indicates that as prices approach liquidation levels, excessively leveraged long positions are forcibly closed.
Interestingly, a similar situation occurred during the recent rebound that broke through $90,000, where outstanding contracts (OI) also saw a similar contraction, but this time the contraction signaled a short squeeze. Such fluctuations characterize a healthy reset of derivatives positions, typically appearing in the early stages of new market trends. The emergence of such squeezes suggests that this rally has cleared excessive leverage, laying the groundwork for a stronger upward trend.
As leveraged short positions were liquidated, the number of outstanding futures contracts decreased by 10%, from 370,000 BTC to 336,000 BTC. This drop gives us an approximate understanding of the scale of the short squeeze. This process also reduces the likelihood of unhealthy deleveraging events occurring and may mitigate the potential for short-term price volatility.
The relative lightness of long positions in the perpetual contract market is another key signal that derivatives are catching up with the momentum of the spot market. Financing rates across major exchanges are among the most effective tools for measuring directional tendencies in these markets. In recent weeks, despite the bullish momentum, financing rates have remained neutral.
As shown in the chart below, since late April, average and individual financing 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, there seems to be limited long leverage in the market, 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. This indicator is calculated by subtracting the implied volatility (IV) of 25 Delta put options from that of 25 Delta call options. Therefore, a negative skew indicates that the price of call options is higher than that of put options, suggesting that traders are betting more aggressively on upward trends, which is often a sign of underlying bullish sentiment.
Currently, the 25 Delta skew (1 month) has dropped to -6.1%, which means 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 risk.
While sustained negative skew itself is not a clear signal, it often aligns with rising market optimism, especially after a strong rally. To keep the options market in sync with bullish spot dynamics, we hope to see this deviation remain below or around 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 positions and supportive off-chain funding flows. Demand appears to be mainly coming from spot ETFs and large spot exchanges like Coinbase. The emergence of key support levels around the $95,000 cost basis and the easing of selling pressure further enhance the strength of this upward trend.
However, the derivatives market seems to be catching up, as outstanding contracts and financing rates have not fully aligned with the upward momentum of the spot market. The positions in the options market reflect a cautious but optimistic outlook, while the current futures market shows almost no signs of excessive long leverage.