Bitcoin's Hidden Bullish Signals Amid Volatility: Is the Bottom Near?

Bitcoin's price action in late 2025 has been a rollercoaster, oscillating between bearish capitulation and tentative signs of stabilization. While the broader market remains fragile, a closer look at technical and on-chain metrics reveals subtle but compelling bullish signals that suggest the bottom may be near-or at least, the worst of the selloff could be behind us.

Technical Indicators: Divergences and Structural Support

Bitcoin's recent price action has painted a mixed picture. On the daily and weekly charts, the asset has formed bearish candlesticks with long upper wicks and small red bodies, signaling fading bullish momentum. However, technical divergences are emerging that could hint at a reversal. For instance, the RSI has shown a bullish divergence: Bitcoin's price has formed lower lows while the RSI has formed higher lows, suggesting downward momentum is weakening. This pattern historically precedes trend reversals, though confirmation from price action is still needed.

Structurally, Bitcoin has found critical support near the $80,000 level, where the True Market Mean, U.S. ETF cost basis, and 2024 yearly cost basis converge. This zone has acted as a floor since October 2023, and its repeated resilience suggests a psychological and structural barrier against further declines. Meanwhile, the MACD histogram has turned negative, but its bearish crossover is losing steam, with the line forming lower highs as prices trend lower-a sign the downtrend may be exhausting itself.

On-Chain Metrics: Accumulation and Capitulation

On-chain data tells a more nuanced story. Bitcoin's market structure remains fragile, with rising unrealized losses and elevated realized loss realization. Yet, accumulation patterns are emerging among mid-sized wallets (10–1,000 BTC), which have swung sharply into buying mode. Retail participants, who hold less than 10 BTC, have also reduced selling and shown early signs of accumulation. This shift contrasts with the persistent distribution by large whales (10,000+ BTC), who continue to offload coins amid weak demand.

A key on-chain signal is the Network Value to Transactions (NVT) ratio, which has stabilized at a healthy 1.51, indicating Bitcoin's valuation is supported by real transactional demand rather than speculative fervor. Additionally, the NVT golden-cross in May 2025 reinforced this trend, suggesting the market is not in a speculative bubble. Meanwhile, the Entity-Adjusted Realized Loss metric has spiked to $403.4M per day, reflecting capitulation by short-term holders whose profit/loss ratio has collapsed to 0.07x. This is a classic sign of market exhaustion, often preceding bottoms.

Derivatives and Options: Defensive Positioning

The derivatives market has also shifted toward caution. Bitcoin's perpetual futures funding rates have turned negative, signaling an overheated market with excessive long positions. This mirrors the backwardation seen in Q4 2025, where futures prices traded below spot prices-a rare occurrence historically aligned with market bottoms. Options markets further reinforce this narrative: put demand at the $100K strike has surged, with traders hedging against downside risks while maintaining a bullish long-term outlook.

Notably, Bitcoin's price correction below $85,000 in November 2025 triggered $2 billion in cascading liquidations, pushing the Fear & Greed Index to an extreme fear level of 11. While this highlights systemic fragility, it also suggests that the most leveraged positions have been purged, potentially clearing the way for a rebound.

The Fragile Equilibrium

Despite these bullish signals, Bitcoin remains in a structurally fragile range. ETF flows have turned negative, with U.S. spot Bitcoin ETFs experiencing daily outflows of –$150M to –$700M. Long-term holders (LTHs) have sold 300K BTC since July 2025, and their profit-taking activity has accelerated as prices trend lower. This quiet distribution underscores the market's thin liquidity and weak institutional demand.

To stabilize, Bitcoin must hold the 0.75–0.85 quantile band ($96.1K–$106K), a critical zone for restoring market structure. A break above this range could signal the end of bearish momentum, but a breakdown would likely retest the $80K support level.

Conclusion: A Bottom in the Making?

Bitcoin's current environment is a tug-of-war between bearish exhaustion and cautious optimism. While the broader trend remains downward, the accumulation by mid-sized wallets, structural support at $80K, and defensive positioning in derivatives markets suggest the worst may be over. However, a sustainable recovery will depend on renewed inflows and a retest of key cost-basis levels like the STH-Cost Basis (~$102.7K).

For now, the market is in a fragile equilibrium. Traders should monitor the $80K–$90K range closely, as a sustained break above $92K could reignite bullish momentum. Until then, patience-and a watchful eye on on-chain metrics-will be key.