Bitcoin Market Turns Defensive After Sharp Drop

The crypto market has entered a defensive phase, according to Glassnode, which cited multiple technical and on-chain indicators. Bitcoin’s sudden drop from $115,000 to $104,000 in just four days is being described by analysts as a fast and ruthless market cleanup that shook out weaker players.

Although Bitcoin has rebounded, sentiment has not fully healed. Traders are still cautious, and this defensive stance is visible in current positioning and capital flows.

On-Chain Metrics Reveal Growing Market Stress

Glassnode highlighted several signals pointing to defensive behavior across the market:

• The RSI briefly broke below its lower band and remains in a weak zone
• Cumulative volume delta stays negative, showing continued selling pressure
• Spot volumes fell during the drop, signaling soft demand
• Open interest and funding both declined
• The 25-Delta Skew in options surged, showing increased demand for downside protection

Long-Term Holders Accumulate as Confidence Lags

Analysts also noted that NUPL has turned negative and RPL fell below prior lows, both signs of rising stress in the market. However, Realized Cap continues to climb, suggesting long-term investors are quietly accumulating Bitcoin despite short-term fear.

Glassnode concluded that while the rebound is encouraging, the market remains fragile and confidence must return before bullish momentum can resume. Meanwhile, CryptoQuant recently suggested that Bitcoin may be entering the late stages of its bullish cycle, adding more intrigue to what comes next.

Analysts say the coming weeks may bring the next decisive shift. ETF flows, liquidity trends, and macro events could either reignite momentum or deepen caution.

A bullish scenario would require stronger inflows and a recovery in demand, while a bearish outcome could emerge if defensive positioning intensifies and liquidity weakens. With tension building on-chain, markets may be approaching an inflection point where the next major breakout or breakdown forms.

For context, CryptoQuant recently suggested that Bitcoin may be entering the late stages of its bullish cycle, adding more uncertainty — and excitement — to what lies ahead.