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Bitcoin Trading in Range as Market Sentiment Weakens: What’s Next for the Leading Cryptocurrency?

1 day ago
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Recently, Bitcoin has traded within the $93,000 to $97,000 range, which represents a cool period for the crypto market.

As with any trading asset, this has led to speculation and second-guessing—what’s the next move for Bitcoin? Of course, any talk about the next move in the crypto market has to take the broader financial market into account. There’s been some volatility in traditional financial markets, and that has certainly bled over into the crypto space. But while Bitcoin is far from the glory days of January 2020 to March 2021, when it could hit new highs almost weekly, it remains, at the very least, stable.

Weakening Capital Inflows and Declining Derivatives Activity

When we analyze the current market conditions more deeply, we see that Bitcoin is not in the best situation. The inflows of capital have not only stopped growing, but they have actually started shrinking. And this is not just a few months behind; going back into late 2022 and early 2023, we see that this trend has picked up consistent momentum. The lack of fresh capital coming into the market can lead to reduced buying pressure, causing price action to stagnate. Another death knell for us to analyze is that the derivatives activity of Bitcoin is in a clear downturn. While this isn’t a clear “tell” for the price of Bitcoin, it is certainly a serious sign of market fatigue.

Moreover, Bitcoin’s accumulation patterns for short-term holders (STHs) now closely resemble those seen during a previous market decline: May 2021. When we observe the current STH accumulation tendency alongside the STH accumulation of May 2021, the main feature that becomes apparent is less confidence about Bitcoin’s price performance in the near term. This lack of confidence manifests in reduced buying and holding activity, which is not good for Bitcoin’s price trajectory and is often a leading indicator of impending price corrections.

The Realized Loss Margin and Historical Buying Opportunities

Even with these cooling signals, an important indicator suggests that Bitcoin could be nearing a critical buying opportunity. The best times, historically, to buy Bitcoin have been when the trading margin of realized losses hit about -12%. This statistic, which tracks the price at which Bitcoin was last bought versus its current market price, is now hovering at about -2.37%. While we’re still a ways off from the -12% mark that has historically been associated with a strong buying signal, it’s worth remembering that Bitcoin isn’t the kind of asset that lingers. Its price can swing wildly and often upward, depending on what it feels like doing.

Those who have held onto Bitcoin for the last several months may now be sitting with some lost and unfound cash. However, those Bitcoin traders who had the courage (or folly) to buy and hold for the long haul are probably still seeing positive returns. The million-dollar—actually, since this is about Bitcoin, the billion-dollar—question is whether the losses we now see will lead to a rip-roaring bounce-back or if the Bitcoin market has instead shifted to a cooler, calmer phase.

Long-Term Holders in “Denial” Phase

At present, Bitcoin’s long-term holders find themselves in what has come to be known as the “denial” phase. This is a psychological state that gets observed during bear markets, where investors absolutely refuse to acknowledge the idea that a significant price correction could be happening, even in the face of some pretty stark stagnation signs. If we look back through time, the denial phase has several times preceded a major shift in the market, up or down. So, if Bitcoin’s long-term holders are “in denial,” that could mean a significant price move is about to happen — up or down.

A delayed response to market corrections often results from denial, in which investors hold out hope that the market will bounce back even as signs of a slowdown grow more pronounced. This phase can last for weeks or months, but when it ends, watch out! It often triggers sharp price movements as long-term holders finally take the medicine they had long hoped to avoid.

ETF Outflows and Inflows: A Mixed Signal

The Bitcoin market is witnessing something of an opposite effect from the influx of funds into Bitcoin spot ETFs. Since November 2022, there has been a steady stream of outflows from these products.

February 18, 2025: Total net outflow from Bitcoin spot ETFs: $60.635 million.

Approximate total outflows since November 2022: $500 million.

Nonetheless, this outflow was countered by hefty inflows into a certain Bitcoin ETF. The BlackRock ETF, IBIT, netted an inflow of $68.4413 million on the same day. This tells us that even though some institutional investors are backing away from Bitcoin for now, there are still large, and I mean large, contingent bets on the table staked in favor of the cryptocurrency’s long-term future—its sustainable upward trajectory—by a number of deeply-manned and deeply-resourced investment offices.

What’s Next for Bitcoin?

As Bitcoin maintains its trading pattern, the next few weeks and months will be vital in determining whether the cryptocurrency’s recent price drop is merely a short-term dip or the start of a protracted decline. Current information points toward a market that is cooling, with less enthusiasm from investors and, seemingly, from the Bitcoin itself. But it’s not all bad news; the effects of tethering capital to an asset are beginning to wear off, which could lead to some renewed enthusiasm for Bitcoin.

At present, those who hold Bitcoin for the long term must choose whether to remain steadfastly optimistic about an imminent recovery or to moderate their hopes in light of a situation that could well involve Bitcoin trading at lower levels for a longer span of time. Whatever the future holds, the past week served as yet another reminder of the cryptocurrency’s dizzying volatility.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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Source: https://nulltx.com/bitcoin-trading-in-range-as-market-sentiment-weakens-whats-next-for-the-leading-cryptocurrency/