Why Bitcoin’s recovery is on thin ice despite rebounding past $66K
Glassnode pointed out that spot volume has collapsed 40.4% over the past week, casting doubt on the current bounce's strength.
On the 5th of June, Bitcoin [BTC] completed a bearish impulse price move, falling from $74.5k to $59.1k in a week. From the low of $60,780 made on the 9th of June, Bitcoin bounced to $67,292 by the 15th of June.
AMBCrypto reported that the Spot ETF flows remained bearish for five weeks straight, yet the price had continued to bounce. The bounce was part of a healthy market pullback, but it did not signal that a bullish trend would be established.
Evidence that Bitcoin’s trend remained unchanged
Optimism about the U.S.-Iran peace deal might have boosted short-term sentiment, but a looming Bank of Japan tightening could undo the recent bounce. Increasing miner stress also highlighted the potential for deeper drawdown.
On the other hand, crypto analyst Axel Adler Jr. noted that the Bitcoin bounce from $60k was driven by returning buyers instead of a short squeeze.
The analyst noted that eight of the previous 10 trading days have seen values above 1.0, meaning aggressive buyers are in control. Since it is the takers that drive price movement, the price has climbed by nearly 12% since the $59.1k low.
The market has undergone a reversal in order flow and was favorable to the buyers in the short term.
The Funding Rate has also been positive during the bounce. If it had been a short squeeze, the Funding Rates would be negative, the analyst concluded. Instead, the positive readings meant that long leverage was already back in the market.
It shows market participants have enough belief to pay to keep their long positions open. Steady demand and positive Funding Rates would help keep the relief rally going. A slowdown in demand can be an early sign of shifting sentiment.
Recovery is happening on “thin ice”
In a weekly report, Glassnode pointed out that spot volume has collapsed 40.4% over the past week. Futures Open Interest declined by 3% despite the bounce, a sign that fresh conviction was limited.
The on-chain activity was also relatively quieter as active addresses fell 6.3% and entity-adjusted transfer volume dropped 38.8%. Profitability among holders was also stressed.
Overall, though the taker dynamics have been more constructive, the recovery was still on thin ice.
Final Summary
- The Bitcoin bounce from under $60k was not just a short squeeze but a result of aggressive buyer resurgence.
- Despite this resurgence, quiet on-chain activity, reduced spot volume, miner stress, and unprofitable holders underlined the move’s frailty.
