Bitcoin BTC extended its recovery above the $65,000 mark as improving on-chain activity, stronger inflows into US spot Bitcoin exchange-traded funds (ETFs), and healthier derivatives markets pointed to a gradually stabilizing market.
In its weekly report, the blockchain analytics firm Glassnode cautioned that trading activity in the spot market remains subdued, suggesting investors have yet to regain the conviction needed to fuel Bitcoin’s next major rally.
Technical indicators are not yet in the overbought region, suggesting that Bitcoin could rally higher in the near term.
Bitcoin, the leading cryptocurrency by market cap, is trading above $65,400 after adding more than 1% to its value.
In its report, Glassnode noted that spot trading volumes have fallen below the lower statistical threshold of $4.5 billion, reflecting weaker market participation.
“This persistent lack of liquidity suggests a period of consolidation, where investor participation is currently muted,” Glassnode noted in its latest report.
While activity in the spot market remains relatively quiet, derivatives traders appear to be positioning for larger moves ahead.
According to CoinGlass, Bitcoin futures Open Interest climbed to approximately $48.8 billion alongside the recent price recovery, indicating growing participation in the futures market.
Meanwhile, options Open Interest increased by roughly 2% to $32.6 billion, suggesting traders are opening new positions as they prepare for the market’s next directional move.
Glassnode also observed that the gap between implied and realized volatility has narrowed considerably, indicating that traders are no longer assigning the elevated risk premium that dominated during June’s sell-off.
Demand for protective put options has eased as well, signaling that bearish hedging activity has declined and market sentiment has shifted toward a more neutral stance.
Institutional demand also showed further signs of improvement.
US spot Bitcoin ETFs attracted $110.4 million in inflows on Monday, after recording $76.2 million in net inflows last week.
According to Glassnode, the aggregate investor base across spot Bitcoin ETFs has largely returned to breakeven after previously sitting at an unrealized loss.
The firm believes the improving flows indicate institutional interest is stabilizing, although speculative buying remains measured rather than aggressive.
However, the firm also warned that the growing proportion of short-term holders could make Bitcoin more susceptible to sharp price swings if market sentiment shifts unexpectedly.
“The growing share of short-term, price-sensitive capital raises the likelihood of sharper volatility,” the report added.
The BTC/USD 4-hour chart is bullish and efficient as Bitcoin has added nearly 5% to its value in the last seven days.
The technical indicators are currently bullish, suggesting that buyers are in control of the market.
The RSI of 60 shows buying pressure in the market. However, Bitcoin remains below the overbought region, leaving further room for growth.
The MACD lines also crossed into the positive zone over the weekend, adding further confluence to the bullish narrative.
If the buying pressure persists, buyers will encounter immediate resistance at the June 15 high of $67,286.
A daily candle close above this level could pave the way for Bitcoin to extend its rally towards the $70,000 psychological level for the first time since June 2nd.
However, if the sellers regain control, Bitcoin could retest the Monday low of $63,712. Failure to defend this support level could see BTC extend its correction below $62,000 in the near term.