BTC: From a Steady Decline to Stabilization—Does ETF Fund Inflow Signal Institutional Return?
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BTC: From a Steady Decline to Stabilization—Does ETF Fund Inflow Signal Institutional Return?
If demand continues to rebound, opportunities will gradually emerge in the market.
Navigating Web3 tides with focused insightsAuthor: Glassnode
Translation & Compilation: AididiaoJP, Foresight News
Bitcoin has stabilized near $70,000, with improving capital flows and easing seller pressure. However, spot trading volume remains low, and supply overhang above current price levels suggests that stronger demand is still needed to sustain a durable market recovery.
Executive Summary
- After a sharp sell-off that brought Bitcoin down to ~$67,000, price has gradually stabilized and rebounded toward $70,000—but upward momentum remains tentative.
- Unrealized losses have increased but remain within historical norms, indicating market stress—not yet capitulation.
- A large concentration of short-term holder supply resides between ~$93,000–$97,000, forming a key resistance zone overhead.
- Realized losses remain elevated but show no signs of panic—suggesting an orderly risk-reduction phase rather than a panic-driven selloff.
- Spot volume remains muted; the recent price rebound has not been accompanied by significant volume expansion—reflecting weak confidence and only selective bargain-hunting behavior.
- U.S. spot ETF fund flows, after sustained net outflows, have turned slightly positive—indicating potential re-entry by institutional capital.
- Perpetual futures funding rates remain negative, reflecting persistent bearish sentiment and cautious positioning in derivatives markets.
- Futures open interest remains relatively low, suggesting limited leveraged expansion underpinning this rebound.
- In options markets, skew has stabilized and implied volatility is range-bound—indicating reduced demand for downside hedging.
- Market maker gamma positions have modestly turned positive, signaling improved liquidity conditions and a more balanced market structure.
On-Chain Insights
Higher Lows, Heavy Overhead Pressure
Despite ongoing geopolitical tensions casting uncertainty across equities, energy, and commodities markets, Bitcoin has formed a constructively higher-highs-and-higher-lows structure since early March—trading within a $60,000–$70,000 range.
If this resilience holds, it could lay a relatively solid foundation for longer-term upside. The Short-Term Holder (STH) Cost Basis Heatmap highlights recent accumulation zones, helping identify potential supply and demand levels from the perspective of new entrants.
Within the current price band, nascent accumulation zones are emerging—modest in scale, yet sufficient to explain part of the recent upward price momentum. However, medium-term risk centers on a large concentration of STH supply above $84,000. Whether price rallies into this zone or faces renewed pressure, this cohort may amplify selling pressure.
Medium-Term Range
Building on these supply dynamics, the Realized Price decomposition by holding age provides a finer-grained view of cost basis distribution across investor cohorts. This metric tracks the average acquisition price of tokens held for different durations—helping define near-term support and resistance levels through the lens of investor behavior.
Currently, the cost basis for holders with 1-week–1-month tenure sits at ~$70,200—forming an emerging support level. For those holding 1–3 months, the cost basis is ~$82,200—reinforcing the previously identified overhead resistance.
Together, these two price levels define the most probable medium-term trading range. Yet given the modest size of current accumulation zones, the robustness of the $70,200 support level remains untested. Until a more substantial buyer base forms, the risk of a break below this level persists.
Fear Intensifies, But Capitulation Has Not Arrived
Expanding outward from these granular cost-basis metrics, profit/loss indicators offer a broader cyclical perspective by measuring the balance between greed and fear across the market. Relative Unrealized Loss—the ratio of total unrealized loss across all investors to market cap—is a key gauge of latent selling pressure and prevailing sentiment.
Over the past two months, this metric has remained persistently above 15% of market cap—a structure resembling Q2 2022. This signals high fear—but falls well short of full capitulation seen during extreme stress events like the FTX collapse. Historically, resolving unrealized losses of this magnitude typically requires time, further price adjustment, or both. While a rapid V-shaped reversal remains theoretically possible, achieving it would require sustained, strong inflows of fresh capital in the near term—given the scale of unrealized losses currently outstanding.
Profit Flow Drying Up
Against this backdrop of rising unrealized fear, realized profit levels have contracted sharply since Q4 2025—further confirming weak demand.
Entity-adjusted realized profit (smoothed using a 7-day simple moving average) excludes internal exchange transfers and thus reflects genuine profit-taking activity across the network. This metric has declined from a daily peak of ~$3 billion in July 2025 to under $100 million today—a drop exceeding 96%. Such a steep contraction is typical of late-stage bear markets, where sellers holding profitable positions have largely exited and on-chain liquidity has fallen to cycle lows. While this reduces near-term seller pressure, it also signals a lack of fresh capital inflows needed to sustain a broader market recovery.
Off-Chain Insights
Spot Volume Remains Muted
Following the sharp decline to the $67,000 region, overall spot market activity has remained subdued. During the subsequent rebound, volume on major exchanges showed only a mild response. Though brief bursts of higher volume occurred, they reflected passive reactions—not sustained, confidence-driven buying returning to the market.
Compared to earlier rally phases marked by stronger participation, current spot volume remains weak. This suggests the recent rebound to ~$70,000 is driven primarily by opportunistic dip-buying and short-term position adjustments—not broad-based, scalable spot demand.
The divergence between stabilizing price action and low spot participation signals the market remains in a rebalancing phase. Until spot trading activity shows more sustained expansion, the durability of the uptrend may be fragile—and price action may become more sensitive to shifts in derivatives flows and liquidity conditions than to organic accumulation.
Exchange Fund Flows Rebound
After an extended period of net outflows, U.S. spot ETF fund flows have recently shown early signs of improvement—turning modestly positive on the 7-day moving average over the past few trading days. This suggests institutional demand may be slowly returning as Bitcoin stabilizes and recovers from its dip to ~$67,000.
Although the absolute scale of current inflows remains modest relative to prior accumulation phases, the directional shift is notable. Earlier outflows coincided with weak price action and depressed sentiment, whereas the recent uptick in flows signals traditional market participants are cautiously re-engaging.
This shift is significant because ETF demand has served as a key source of spot market support in this cycle. If inflows sustain a net-positive trend, it would help confirm repairing institutional confidence and growing exposure.
Overall, the recovery remains early and gentle—but the flow reversal marks a constructive structural change compared to the sustained outflow environment of recent weeks.
Persistent Negative Funding Rates
Despite Bitcoin’s gradual stabilization and attempted recovery from its recent pullback, perpetual futures funding rates remain negative—indicating short positions still dominate and traders continue paying funding costs to maintain bearish exposure.
Sustained negative funding reflects broadly cautious sentiment among derivatives participants. Even as price structure improves, traders are not actively rebuilding long positions—a contrast with prior recoveries, when funding rates typically normalized or turned positive alongside improving sentiment.
From a positioning standpoint, persistently negative funding may become a potential upside catalyst, as it signals crowded shorts—raising the risk of a short squeeze if bullish momentum continues. On the other hand, it also reveals limited confidence in the current recovery, particularly among leveraged traders.
Current conditions indicate a defensively oriented derivatives positioning—while spot and ETF flows show signs of stabilization, overall risk appetite remains skewed bearish.
At-the-Money Implied Volatility: Range-Bound, Awaiting Direction
In options markets, Bitcoin’s at-the-money implied volatility mirrors spot conditions—remaining range-bound with mean-reversion tendencies. The front end of the volatility curve is most sensitive to macro events and short-term news. One-week tenor contracts exhibit relatively larger swings—but overall trade within a narrow 50%–60% band. Longer-dated implied volatility remains consistently below 50%, with minimal dispersion across tenors.
Persistently low implied volatility reflects market waiting for a new catalyst to repricing two-way risk. Suppressed long-dated volatility indicates no structural shift in long-term risk pricing—short-term moves are instead driven by near-term contract activity. In this environment, volatility tools serve more to manage short-term uncertainty than to express directional views.
25-Delta Skew: Downside Protection Still Dominant
During this week’s brief volatility spike, skew widened toward puts—confirming this volatility repricing was primarily driven by demand for downside protection.
The 25-delta skew—a measure of the relative cost of puts versus calls at the same delta—rose to 18%–19% for both 1-week and 1-month tenors earlier this week, as Bitcoin dipped below $68,000. This clearly shows that amid heightened geopolitical uncertainty, any sign of price weakness triggers rapid escalation in short-term downside protection demand.
Skew has since retreated but remains relatively elevated, with values across tenors clustered around 10%–12%. The convergence of skew across maturities signals that downside protection preference isn’t limited to front-end contracts—it reflects broad, persistent risk-hedging behavior across market participants.
Skew Index Reveals Divergent Tone
The Skew Index offers another dimension for assessing options market conditions. Unlike 25-delta skew, it assigns greater weight to low-delta options—providing a fuller picture of tail-risk pricing. Currently, the 1-week and 1-month Skew Index readings remain in bearish territory, while the 3-month and 6-month readings (around 2.4% and 7.4%, respectively) have shifted into bullish territory (calculated as call premium minus put premium).
This creates a clear divergence: 25-delta skew shows consistent put bias across tenors, while the Skew Index’s longer-dated readings indicate that, at the far end of the curve, upside tail risk is priced higher than downside tail risk. In other words, although low-to-mid delta puts retain bid support, the market isn’t accumulating deep-out-of-the-money downside protection at longer tenors. Overall, options pricing reflects short-term caution—but a more balanced, even slightly constructive, long-term structure. 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 Will Reset Market Structure
Friday, March 27, marks the simultaneous expiry of weekly, monthly, and quarterly options contracts—a confluence that typically exerts outsized influence on Bitcoin’s price action. As the options market continues to grow, market makers’ hedging activity increasingly impacts short-term price dynamics. With less than 48 hours until expiry, market makers collectively hold short gamma positions—with risk concentrated between $70,000–$75,000. Within this range—and especially in thinner liquidity environments—price may experience accelerated two-way volatility.
Notably, the size of expiring positions is substantial: approximately $10 billion in market maker short gamma will soon be unwound. This represents a major mechanical price driver about to be removed. Once these positions settle, price sensitivity to hedging flows will diminish—and responsiveness to external factors is expected to increase. Against this backdrop, macro developments may become the decisive factor in Bitcoin’s search for its next equilibrium level.
Conclusion
Following a relatively sharp correction, Bitcoin markets are beginning to show some positive signals: price is gradually stabilizing, ETF fund flows are improving, and derivatives positioning is no longer one-sided. The pressure accumulated during the recent selloff appears to be easing—and market conditions are more balanced than a week ago.
Yet the current environment remains insufficient to support a high-confidence breakout. Spot volume remains low, open interest has not meaningfully expanded, and overhead supply remains heavily concentrated. Overall, market structure is healing—but a more durable uptrend requires stronger participation to be confirmed.
For now, the structure is constructive—but not yet definitively bullish. Should demand sustain its return, opportunities will gradually emerge. Yet definitive confirmation that this recovery carries real momentum awaits a meaningful expansion in spot volume and sustained inflows of new capital.
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