ETF capital inflow is slowing down, and BTC is at a crossroads.

Original authors: Chris Beamish, CryptoVizArt, Glassnode Original translation by: AididiaoJP, Foresight News

Bitcoin prices are fluctuating between $110,000 and $116,000, with profit-taking and a reduction in ETF inflows weighing on the upward momentum. The influence of derivatives is too strong, with futures and options playing a balancing role in the market. Recovering $114,000 is key for upward movement, while falling below $108,000 may face deeper pressure.

Abstract

After retreating from its historical high in August, Bitcoin is currently still in the "gap" range of $110,000 to $116,000. The rebound from $107,000 has received support from buyers looking for dips, but the selling pressure from short-term holders has so far limited the upward momentum.

Profit-taking by holders who have held for 3 to 6 months and losses being realized by recent high-level buyers have created resistance. To sustain the rebound, the price needs to stabilize above $114,000 to rebuild confidence and attract capital inflow.

On-chain liquidity remains constructive but is on a downward trend. Meanwhile, ETF inflows have slowed to around ±500 BTC per day, weakening the traditional financial demand that previously drove up prices in March and December 2024.

As spot demand weakens, derivatives have become the main driving force. The futures basis and trading volume remain balanced, while the open interest in options is rising, indicating that the market structure has more risk characteristics.

The market is at a crossroads; recovering to $114,000 could trigger new upward momentum, while a drop below $108,000 may expose the lower limit of the next cluster at around $93,000.

Range Fluctuation

After hitting a historic high in mid-August, market momentum has continued to weaken, pulling Bitcoin below the cost basis of recent high buyers and back into the "gap" range of $110,000 to $116,000. Since then, the price has been fluctuating within this range, gradually filling the gap as supply is redistributed. The key question now is whether this is a healthy consolidation or the first phase of a deep correction.

As shown by the cost basis distribution, the rebound from $108,000 has received significant buying pressure on-chain, which is a "buying the dip" structure that helps stabilize the market.

This report examines the seller dynamics and momentum of on-chain and off-chain metrics, with a focus on analyzing the forces most likely to drive Bitcoin's next decisive breakthrough of this range.

Draw Supply Cluster

First, we plot the cost base of the clusters near the current price, as these levels often anchor short-term price movements.

According to the heat map, there are currently three different groups of investors influencing the price trend:

• The cost basis of high-position buyers in the past three months is close to $113,800.
• Buyers on dips in the past month have gathered around $112,800.
• Short-term holders over the past six months have their cost basis anchored around $108,300.

These price levels define the current trading range. Recovering $113,800 will allow high-position buyers to regain profitability and drive the bullish trend to continue. However, a drop below $108,300 may cause short-term holders to fall back into losses, potentially triggering new selling pressure and opening the way to the lower limit of the next major supply cluster at $93,000.

Experienced short-term holders take profits

After identifying the direct supply clusters shaping the range near the current price, we next examined the behavior of different holder groups during the rebound from $108,000 to $114,000.

Although dip buyers provided support, the selling pressure mainly comes from experienced short-term holders. The 3-6 month holder group realizes about $189 million in profits daily, accounting for about 79% of all short-term holder profits. This indicates that investors who bought earlier during the decline from February to May took profits during the recent rebound, creating significant resistance.

High-position buyers realize losses

In addition to experienced short-term investors taking profits, recent high-level buyers have also put pressure on the market by realizing losses during the same rebound.

As of 3 months, the holder group incurs losses of up to 152 million dollars daily. This behavior mimics the pressure periods earlier in April 2024 and January 2025, when high-position buyers capitulated in a similar manner.

To enable a mid-term rebound, demand must be strong enough to absorb these losses. If prices stabilize above $114,000, it will confirm the recovery of confidence and encourage new capital inflows.

Liquidity Absorption of Selling Pressure

In a situation where profit-taking and loss realization are putting pressure on the market, the next step is to assess whether the new liquidity is strong enough to absorb these sellers.

The net realized profit expressed as a percentage of market capitalization provides this measure. The 90-day simple moving average peaked at 0.065% during the rebound in August and has since shown a downward trend. Although weaker than at its peak, the current level is still relatively high, indicating that capital inflows continue to provide support.

As long as the price remains above $108,000, the liquidity backdrop remains constructive. However, a deeper decline may deplete these inflows and hinder further rebounds.

Traditional finance is losing momentum in capital flow

In addition to on-chain capital flows, assessing external demand through ETFs is also crucial, as ETFs have been a major driving force in this cycle.

Since early August, net inflows into US spot ETFs have significantly decreased, currently hovering around ±500 BTC per day. This is well below the inflow strength that supported the early rebound of this cycle, highlighting the loss of momentum among traditional financial investors. Given the key role that ETFs play in driving upward movements, their slowdown increases the vulnerability of the current structure.

Derivatives Become the Focus

As on-chain liquidity weakens and ETF demand diminishes, attention now turns to the derivatives market, which often sets the tone when spot flows weaken.

The volume Delta skew, which measures the deviation of the accumulated trading volume from its 90-day median, has recovered during the rebound period from $108,000, indicating that selling pressure has exhausted among exchanges like Binance and Bybit. This suggests that futures traders have helped absorb the recent selling pressure.

Looking ahead, the evolution of derivative positions is critical for navigating the market in an environment with low spot liquidity.

Balanced Futures Market

A deeper study of the futures market reveals that the market appears balanced rather than overheated.

Despite the high prices, the 3-month annualized futures basis remains below 10%, reflecting stable demand for leverage without the extreme situations typically seen before liquidation. This indicates a healthier market structure that aligns more with accumulation rather than speculation.

The trading volume of perpetual futures remains sluggish, consistent with the typical post-euphoria calm period. The lack of aggressive leverage surges indicates that the rise is built on a more stable foundation rather than excessive speculation.

The role of options in risk management is increasingly growing.

Finally, the options market provides further insights into how participants manage risk and build positions.

The open interest in Bitcoin options has reached a historical high, reflecting its growing importance. With ETFs providing a spot channel, many institutions prefer to use options to manage risk through protective put options, covered call options, or limited risk strategies.

The implied volatility continues to decline, which is a sign of a more mature and liquid market. Selling volatility (a common traditional financial strategy) has put stable downward pressure on the implied volatility levels, leading to price movements that are more stable compared to past cycles.

The composition of open contracts shows that bullish options significantly outnumber bearish options, especially during the formation phase at the top, highlighting the market's inclination towards bullishness while still managing downside risks. In summary, these dynamics indicate a healthier market structure with more risk management characteristics, which may temper the upcoming frenzy and bearish trends.

Conclusion

The current characteristic of the Bitcoin market is a delicate balance between selling pressure and reduced inflows. Profit-taking by experienced short-term holders, combined with loss realization by recent high-level buyers, has limited upward momentum and made the $110,000 to $116,000 range a major battleground.

On-chain liquidity remains constructive but is showing a downward trend, while ETF fund flows, which were once the cornerstone of this bullish cycle, have lost strength. As a result, the derivatives market has become more important, with futures and options activity helping to absorb sell-offs and influence price direction. Both the futures basis and options positions reflect a more balanced structure compared to the previous overheated phases, indicating that the market is advancing on a more solid foundation.

Looking ahead, whether it can recover and hold the $114,000 level is crucial for restoring confidence and attracting new capital inflows. If this cannot be achieved, short-term holders may face pressure again, with $108,000 and ultimately $93,000 being key downside levels. In short, Bitcoin is at a crossroads, with derivatives support maintaining the market structure, while broader demand must strengthen to drive the next sustained rebound.

Source: Foresight News