BTC has declined into a downtrend and stabilized. The ETF fund inflow suggests institutional return?

Written by: Glassnode

Compiled by: AididiaoJP, Foresight News

Bitcoin has stabilized around $70,000 with improved capital flows and easing seller pressure. However, spot trading volume remains low, and supply pressure above the market indicates that stronger demand is still needed to sustain a lasting recovery.

Summary

After a sharp sell-off that pushed Bitcoin down to around $67,000, it has gradually stabilized and rebounded near $70,000, but the upward momentum remains hesitant.

Unrealized losses have increased but are still within normal historical ranges, indicating market pressure but not full capitulation.

A large portion of short-term holder supply is concentrated between approximately $93,000 and $97,000, forming a key resistance zone above.

Realized losses remain high but show no signs of panic, suggesting the current phase is orderly risk reduction rather than panic selling.

Spot trading volume stays subdued, with no significant increase during the price rebound, reflecting a lack of market confidence and selective bottom-fishing behavior.

Funds in US spot ETFs have shifted from continuous net outflows to slight net inflows, indicating institutional investors may be beginning to re-enter.

Perpetual contract funding rates remain negative, signaling ongoing bearish sentiment and cautious positioning in derivatives.

Open interest in futures remains relatively low, suggesting limited leverage expansion supporting this rebound.

Options market skew indicators are stabilizing, and implied volatility fluctuates within a range, indicating reduced demand for downside hedging.

Market makers’ Gamma positions have slightly turned positive, showing improved liquidity and a more balanced market structure.

On-Chain Insights

Higher lows, heavy overhead resistance

Despite ongoing geopolitical tensions affecting stocks, energy, and commodities, Bitcoin has been making higher highs and higher lows since early March, forming a constructive structure within the $60,000–$70,000 range.

If this resilience continues, it could lay a relatively solid foundation for a long-term upward trend. A heatmap of recent cost basis distributions among short-term holders reveals areas where supply has recently been absorbed, helping identify potential supply and demand zones from new entrants’ perspectives.

Within the current price range, new accumulation zones are gradually forming, though modest in size, enough to explain some recent upward momentum. However, a more significant risk exists above $84,000, where a large short-term holder supply cluster could amplify selling pressure if prices rise into that zone or face renewed market stress.

Medium-term Range

Building on the supply dynamics, a realized price decomposition by holding period offers a more detailed view of investor cost bases, helping identify support and resistance levels from a behavioral standpoint.

Currently, holders with a 1-week to 1-month average cost basis around $70,200 are forming a support level; those holding for 1 to 3 months at approximately $82,200 reinforce the resistance above.

Together, these two levels define the most probable medium-term trading range. However, given the limited size of the current accumulation zone, the support at $70,200 needs to be tested for robustness. Until a more solid buyer base develops, caution remains warranted against a potential breakdown below this level.

Fear intensifies, but no full capitulation

Extending from the detailed cost basis metrics, profit and loss indicators provide a macro view of market sentiment by examining the balance between greed and fear. The relative unrealized loss ratio—total unrealized losses as a percentage of market cap—serves as an important gauge of potential selling pressure and overall market mood.

Over the past two months, this indicator has remained above 15%, similar to levels seen in Q2 2022. This suggests the market is in a state of heightened fear but has not yet reached the extreme capitulation levels seen during events like the FTX collapse. Historically, unwinding current unrealized losses typically takes time, further price adjustments, or both. While a rapid V-shaped recovery is theoretically possible, the scale of unrealized losses implies that sustained and strong new capital inflows would be necessary for such a reversal.

Profit flow exhaustion

Against the backdrop of rising unrealized fear, realized profits have been shrinking significantly since Q4 2025, further confirming demand weakness.

Adjusted for exchange internal transfers, the realized profit indicator (smoothed with a 7-day simple moving average) accurately reflects real profit-taking activity in the network. It has fallen from a peak of about $30 billion daily in July 2025 to less than $1 billion currently—a decline of over 96%. Such a sharp contraction is typical of late-stage bear markets, where sellers with profitable positions have largely exited, and on-chain liquidity drops to cycle lows. While this environment reduces short-term selling pressure, it also indicates a lack of fresh capital entering to support ongoing recovery.

Off-Chain Insights

Spot volume remains subdued

After prices sharply declined to around $67,000, overall spot market activity stayed muted. During the subsequent rebound, major exchanges saw only modest volume increases. Occasional short-lived spikes reflect passive reactions rather than sustained confidence-driven buying.

Compared to the more active participation during previous upward moves, current spot volume remains weak. This suggests that the recent price rise to near $70,000 relies more on selective dip-buying and short-term repositioning rather than broad-based demand.

The divergence between stable price action and low spot activity indicates the market is still in a rebalancing phase. Until spot trading activity expands more consistently, the upward trend may remain fragile, with derivative flows and liquidity conditions exerting greater influence on price movements than organic accumulation.

Exchange fund flows rebound

After a prolonged period of net outflows, US spot ETF fund flows have recently shown signs of improvement, with the 7-day moving average turning slightly positive in recent days. This suggests that, following the stabilization and partial rebound from $67,000, institutional demand may be gradually returning.

Although the scale of inflows remains limited compared to previous accumulation phases, the directional shift is noteworthy. Past outflows coincided with weak price action and low market sentiment, while recent inflows indicate that traditional market participants are tentatively re-engaging.

This shift is significant because ETF demand has become an important support for the spot market during this cycle. Sustained net inflows could help confirm that institutional confidence is recovering and that they are increasing their exposure again.

Overall, the recovery remains early and modest, but the change in fund flows marks a positive structural development compared to the persistent outflows of recent weeks.

Persistent negative funding rates

Despite Bitcoin’s gradual stabilization and attempts at a rebound from recent dips, perpetual contract funding rates remain in negative territory. This indicates that short positions still dominate, with traders willing to pay funding costs to maintain downside exposure.

Continued negative funding rates reflect cautious sentiment among derivatives market participants. Even as price structures improve, traders show little enthusiasm for rebuilding long positions. This contrasts with previous recovery phases where funding rates normalized or turned positive as sentiment improved.

From a positioning perspective, persistently negative rates could potentially drive prices higher if short squeeze conditions develop, as they suggest crowded short positions. Conversely, they also highlight lingering market skepticism about the sustainability of the rebound, especially among leveraged traders.

Overall, derivatives positioning remains defensive, with spot and ETF flows showing some stabilization but overall risk appetite still leaning bearish.

At-the-money implied volatility: Range-bound, awaiting direction

In the options market, Bitcoin’s at-the-money implied volatility exhibits similar characteristics to spot, remaining range-bound with mean reversion tendencies. The front end of the volatility curve reacts most strongly to macro events and short-term news. One-week implied volatility fluctuates within a relatively narrow 50–60% range, while longer maturities stay below 50%, with limited differences across tenors.

Implied volatility remains low overall, indicating the market is waiting for new catalysts to reprice two-way risks. Longer-term implied volatility levels are suppressed, suggesting no structural change in long-term risk perception at this stage. Short-term volatility is primarily driven by near-month trading activity. In this environment, volatility tools are more suited for hedging short-term uncertainty rather than expressing long-term directional views.

25 Delta Skew: Downside protection still dominant

During a brief uptick in volatility this week, the 25 delta skew widened toward puts, confirming that the recent volatility reappraisal was mainly driven by demand for downside protection.

When Bitcoin’s price fell below $68,000 earlier this week, the 1-week and 1-month skew values rose to around 18–19%. This clearly indicates that, amid geopolitical uncertainty, market participants’ demand for short-term downside hedges spikes quickly once price momentum weakens.

The skew then retreated but remains relatively high, with levels between 10–12%. The convergence of skew across different maturities suggests that the market’s preference for downside protection is not limited to near-term options but reflects a broader risk-averse stance.

Option Market Sentiment Divergence

The skew index offers another perspective on market conditions. Unlike the 25 delta skew, this index assigns higher weight to low delta options, providing a more comprehensive view of tail risk pricing. Currently, the 1-week and 1-month skew readings remain in the put-biased zone, while the 3- and 6-month readings (around 2.4% and 7.4%) have shifted into the call-biased zone (calculated as calls minus puts).

This creates a notable divergence: while 25 delta skew shows a bearish tilt across maturities, the skew index’s longer-term readings suggest that the market is pricing higher upside tail risk relative to downside. Despite ongoing demand for deep out-of-the-money puts at shorter maturities, the overall options market appears to be balancing cautious short-term sentiment with a slightly more optimistic long-term outlook. This pattern is common in crypto markets, where participants often use deep out-of-the-money calls to capture asymmetric upside potential.

Market Maker Gamma: Expiry resets market structure

Friday, March 27, marks the expiration of weekly, monthly, and quarterly options, often causing significant price impacts. As options markets grow, market maker hedging activity increasingly influences short-term price dynamics. With less than 48 hours to expiry, market makers are generally in short Gamma positions, with risk concentrated between $70,000 and $75,000. In this zone, especially in less liquid conditions, prices may experience accelerated two-way moves.

Notably, a sizable position—around $10 billion in short Gamma—will be settled soon, removing a key mechanical driver of price. Once these positions are closed, the market’s hedge-driven price responsiveness is expected to diminish, making external macro factors more influential in determining Bitcoin’s next equilibrium.

Conclusion

After a significant correction, Bitcoin shows some positive signs: stabilization in price, improved ETF fund flows, and a more balanced derivatives market structure. The recent selling pressure appears to be easing, and the market is becoming more balanced than a week ago.

However, the environment is not yet conducive to a decisive breakout. Spot volume remains low, open interest has not expanded significantly, and overhead supply persists. Overall, the market is in a recovery phase, but sustained upward movement requires stronger participation and confirmation through increased spot activity and fresh capital inflows. The current constructive structure needs further validation before a more confident bullish trend can establish.