Bitcoin (BTC) is starting to regain demand. This comes after weeks of sustained selling pressure that dampened participation in both the spot and derivatives markets.
Over the past week, the 30-day cumulative demand has rebounded sharply from around -500,000 BTC to around -75,000 BTC. This shift indicates that the appetite for risk is gradually returning.
Notably, demand for futures contracts recovered from around -295,000 Bitcoin A little higher than neutral. Despite this, spot demand remained weak near -78,000 BTC, indicating that long-term investors are still waiting for stronger confirmation. Furthermore, this divergence indicates that traders are bracing for higher prices before meaningful capital enters the spot market.
Although sentiment has clearly improved, Bitcoin’s recovery will remain subdued until spot accumulation strengthens, strengthening derivatives-driven momentum with broader investor conviction.
Negative fears are beginning to subside
The Bitcoin options market is highlighting cautious spot participation, even though investors are no longer pricing in downside risks as aggressively compared to the previous sell-off.
During the sell-off in February and June, implied volatility rose as traders rushed to hedge against deeper losses. July presents a different picture. In contrast, in July, as Bitcoin traded between $60,000 and $65,000, bearish premiums declined significantly.
Such a divergence indicates that expectations are shifting from another capitulation towards a slower process of reaching the bottom.
This shift reflects a market that has already seen significant declines over several months. As a result, reducing the urgency for costly downside protection. However, investors should be careful because calmer options pricing does not necessarily translate into renewed conviction.
Additionally, ETF participation remains inconsistent while spot accretion has trailed demand for derivatives. Therefore, until new capital flows return to spot markets, improving sentiment may face challenges in generating the large-scale buying necessary for a lasting recovery.
Distribution remains a constraint on the market
Even as bearish fears continue to subside, Bitcoin’s recovery still faces resistance from holders reaping profits accumulated during the previous session. Long-term holder realized losses remain elevated on the 30-day moving average, although they have moderated from the extreme highs recorded during the 2022 bear market.
Meanwhile, realized P&L data show that short-term bondholders still account for a larger share of market activity, reflecting uncertainty among new investors as prices stabilize.
This combination indicates that the offer is gradually shifting from experienced to new participants rather than disappearing completely. Furthermore, the increase in demand for Bitcoin consumes most of the supply distribution.
However, until long-term holder selling slows further, Bitcoin’s recovery will likely remain gradual rather than accelerating into a sustained uptrend.
Final summary
- Bitcoin’s recovery remains incomplete as spot demand continues to lag derivatives activity.
- BTC continues to face a prolonged sell-off despite easing bearish concerns and improving market sentiment.
