Bitcoin's Flow Metrics: Assessing the "Deep Bear" and Squeeze Mechanics

Bitcoin is stuck in a structurally weaker environment at around $70,000, signaling a shrinking buyer base rather than a panic. On-chain data confirms a demand vacuum with spot trading volumes remaining weak, indicating the market lacks the participation to absorb sell-side flows.

Institutional support has vanished, reversing sharply from last year. US spot bitcoin ETFs have turned into net sellers, creating a year-on-year demand gap measured in tens of thousands of bitcoin. This institutional withdrawal removes a key bid that historically supported bull markets, leaving spot demand to fade.

The result is accelerating stress among holders. Realized losses are accelerating, a clear signal that many are being forced to exit at a loss. This combination of weak spot demand, fading institutional flows, and mounting realized losses defines a deep bear phase, not yet a collapse but one with significant downside momentum.

The Mechanics of the Recent Push: A Derivatives-Led Squeeze

The recent move into the $96K region was mechanically driven by a derivatives-led short squeeze on comparatively thin futures volume. This suggests the price pop was not supported by broad-based spot accumulation but by forced deleveraging in futures markets, a classic squeeze dynamic. The move lacked the underlying buying pressure needed for a sustainable rally.

This pattern is consistent with a "bubble squeeze" hypothesis, where a rapid price spike is fueled by concentrated short covering rather than fundamental demand. The thin volume on which the squeeze occurred highlights the fragility of the move, making it vulnerable to reversal once the forced liquidations are complete. In reality, it was a technical event, not a shift in market conviction.

Options markets continue to price elevated downside convexity, indicating tail-risk demand remains firm despite improving spot positioning. Traders are still paying for protection, signaling that the market's underlying vulnerability to abrupt repricing has not been resolved. The bottom line is that while the squeeze provided a temporary lift, the fundamental flow picture-weak spot demand and fading institutional support-remains unchanged.

Catalysts and Risks: What to Watch for a Breakout or Breakdown

The next major move hinges on a reversal in institutional flows. Watch for a sustained shift in US spot bitcoin ETFs from net selling to net buying. This would signal a closing of the year-on-year demand gap and provide the consistent bid needed to challenge the current price structure.

The immediate price battleground is the $68,000–$70,000 range. On-chain data identifies this as a high-conviction zone with dense supply, acting as a near-term floor if support holds. A decisive break below this cluster would confirm the bearish flow regime, while a sustained rally above it would be a key early signal of a structural shift.

Monitor total 24-hour crypto liquidations as a gauge of market fragility. Sustained levels above $800 million underscore elevated volatility and squeeze risk. High liquidation volumes amplify price swings and can trigger cascading forced selling, making the market more vulnerable to abrupt breakdowns if spot demand remains weak.