Bitcoin (BTC) Faces Volatility as It Tests Key Support Levels

Bitcoin has experienced a significant downturn, breaching the $90,000 support level and nearing $80,000 before showing signs of a slight recovery, according to Glassnode. This decline marks an extension of the ongoing bearish trend, pushing the cryptocurrency into a historically strong demand zone.

Market Overview

The recent price movements have deepened the market drawdown, yet the defense of the mid-$80,000 range offers a glimmer of potential stabilization. Despite the prevailing downward trend, indicators such as the 14-day Relative Strength Index (RSI) have remained in oversold territory, hinting at possible exhaustion in selling pressure.

In the derivatives market, Futures and Perpetual Contract Volume Delta (CVD) remain negative, while stable Open Interest suggests that current declines are driven by the unwinding of positions rather than new short positions. Spot market activity has been subdued, with decreasing volumes and continued outflows from ETFs, indicating a shift from aggressive selling to a more controlled de-risking.

On-Chain and Off-Chain Indicators

On-chain metrics also reflect quieter network conditions, with softened transfer volumes, fee revenue, and Realized Capital Change. Profitability metrics like Net Unrealized Profit/Loss (NUPL) and Realized Profit/Loss indicate deeper unrealized losses, aligning with patterns seen in late-stage corrections.

Off-chain data reveals a market in tension, with options markets maintaining a defensive stance. Elevated skew and tighter volatility spreads suggest expectations of continued market turbulence, albeit with reduced panic levels.

Potential Market Bottom

While Bitcoin remains under pressure, the moderation of outflows, stabilization in momentum indicators, and absence of new speculative leverage suggest the market might be forming an early bottom within the $84,000 to $90,000 range. This period of consolidation could pave the way for a potential recovery if selling pressure continues to ease.

Overall, Bitcoin is navigating a critical phase as it tests key support levels. Market participants are closely monitoring these developments, hoping for signs of a sustainable recovery amid ongoing volatility.

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