Bitcoin (BTC) is starting to regain demand. This comes after weeks of selling pressure weakened participation in both spot and derivatives markets.
Last week, the 30-day cumulative demand rose sharply from around -500,000 BTC to around -75,000 BTC. This change signaled that risk appetite was gradually returning.
Futures demand in particular has recovered from around -295,000 Bitcoin slightly above neutral. Despite this, spot demand remains weak around -78,000 BTC, indicating that long-term investors are still waiting for stronger confirmation. Moreover, this difference shows that traders are taking positions at higher prices before meaningful capital enters the spot market.
Despite sentiment clearly improving, Bitcoin’s recovery will remain vulnerable until spot accumulation strengthens and derivatives-driven momentum is reinforced by broader investor confidence.
Negative fears begin to ease
While investors are no longer aggressively pricing in downside risk compared to previous sell-offs, Bitcoin’s options market differentiates cautious spot participation.
During the February and June sell-off, implied volatility in the put increased as traders sought to protect against deeper losses. July presents a different picture. In contrast, downside premiums have noticeably diminished in July as Bitcoin traded between $60,000 and $65,000.
Such a divergence suggests that expectations are shifting from another capitulation to a slower bottoming process.
This change reflects a market that has been experiencing significant declines for several months. As a result, the urgency to protect against costly adverse effects becomes less urgent. Even so, investors need to be careful because calmer option pricing does not necessarily mean renewed conviction.
Additionally, ETF participation has remained inconsistent, while spot accumulation has lagged behind derivatives demand. Therefore, until fresh capital returns to spot markets, improving sentiment may face difficulties in generating the widespread buying needed for a sustained recovery.
Distribution remains a headwind in the market
Even as downside fears continue to subside, Bitcoin’s recovery faces resistance from holders who took profits accumulated in the previous cycle. Long-term investors noticed that losses remained high on the 30-day Moving Average, although they had eased after the extreme gains recorded in the 2022 bear market.
Meanwhile, realized profit and loss data shows that short-term investors continue to account for a larger share of market activity; This reflects uncertainty among new investors as prices stabilize.
This combination suggests that supply is slowly shifting away from experienced owners towards new entrants, rather than disappearing completely. Moreover, the increase in bitcoin demand is consuming much of the supply distribution.
However, until long-term holders’ selling slows further, Bitcoin’s recovery is likely to remain gradual rather than accelerating towards a sustained uptrend.
Final Summary
- Bitcoin’s recovery is not yet complete as spot demand continues to trail derivative activity.
- Although downside fears have diminished and market sentiment has improved, BTC still faces a long-term bearer sell-off.
