Cryptocurrency Bitcoin experiences resurgence this week, yet Glassnode foresees potential issues down the line
Bitcoin Market Trends Show Late-Cycle Patterns, According to Glassnode Report
In a recent weekly report, Glassnode has analysed the trends in the Bitcoin market, highlighting late-cycle patterns characterized by declining capital inflows and surging speculative activity. This analysis comes as the price of Bitcoin rebounded strongly over the past week, reaching towards $121,000, but retraced about 9.2% from its $124,400 high to $112,900.
One of the key findings from the report is that the realized capitalization increased only 6% monthly during the current rally, which is much lower than the 13% recorded during the initial $100,000 breakout in late 2024. This suggests that the current rally has not attracted as much new capital as earlier breakouts.
Another important point is that the Volatility-Adjusted Net Realized Profit/Loss metric shows reduced selling pressure compared to prior major breakouts. This suggests that the market has struggled to sustain momentum despite lighter sell-side pressure, pointing to growing fragility.
The report also notes that futures market leverage remains elevated with around $67 billion in open interest, contributing to increased volatility and risk of deleveraging during price weakness.
Spot price momentum is weakening, as indicated by the Relative Strength Index (RSI) reaching 47.5 (below the midpoint), indicating growing caution among investors despite a recent bounce. Price remains range-bound between roughly $105,000 and $125,000, with critical volume zones between $110,000-$115,000 that could influence near-term pullbacks or breakouts to higher targets like $141,000.
Glassnode highlights a disconnect between the market’s fragile short-term technical positioning and the broader underlying industry strength, noting that without renewed spot market conviction, positioning is vulnerable to deeper deleveraging despite robust institutional interest, such as spot ETF inflows near $900 million.
On the other hand, the daily active address count has risen to 793,000, indicating elevated user engagement on the network. The demand for long positions remains high despite the decline in the Funding Rate, and open interest in the options market has increased compared to futures, reaching $42.4 billion, representing a 6.74% increase from last week.
However, the Volatility Spread has dropped to 10.45% from 31.97% last week, signaling that traders are expecting less volatility. Spot Volume decreased from $7.3 billion to $5.7 billion, representing a 22% reduction in market engagement. On-chain transfer volume has dropped slightly from $8.6B to $8.5B, but remains steady. Trade Volume in the ETF markets has experienced a 27.7% drop to $13.7 billion.
In summary, Glassnode portrays Bitcoin's current market trend as fragile and late-cycle, with high leverage and speculative activity creating volatility, subdued capital inflows, and a failure to sustain price momentum despite reduced selling pressure and strong institutional backing. The market remains at a critical juncture where renewed conviction would be needed to push beyond recent price ranges and avoid deleveraging risks.
- The Glassnode report reveals that the Bitcoin market is experiencing late-cycle patterns, with declining capital inflows and surging speculative activity in the crypto trading sphere.
- Despite the rise in demand for long positions, the report indicates that the current Bitcoin rally has not attracted as much new capital as earlier breakouts, as shown by the low realized capitalization increase.
- The technology-driven finance industry is witnessing a disconnect between Bitcoin's fragile short-term technical positioning and the robust institutional interest, such as spot ETF inflows and high open interest in the options market.
