Bitcoin Market Enters Cooling Phase as Retail Participation Declines 7%

Crypto analytics platform Glassnode has issued an alert indicating that the Bitcoin (BTC) market has entered a "cooling phase." This assessment comes after the price of Bitcoin failed to sustain levels above $111,000. The firm attributes this shift to a decline in retail participation and a retreat from aggressive buying behaviors. This trend is supported by the Spot Cumulative Volume Delta (CVD), a technical indicator that has turned bearish. The Spot CVD is used to gauge buying and selling pressure in the spot market in real-time, with a rise indicating bullish sentiment and a fall suggesting bearish sentiment.

Glassnode's analysis highlights several key points: the weakening of spot market signals, a fall in momentum toward neutral levels, a sharp negative turn in the spot CVD, and a dip in volume below the statistical low band. These indicators suggest that short-term traders may be reducing their risk exposure. Despite a sharp increase in inflows to spot Bitcoin exchange-traded funds (ETFs), Glassnode notes subdued organic on-chain activity. This is evidenced by falling fees, stagnant growth in active addresses, and only moderate transfer volumes. The firm explains that while ETF flows have risen sharply, reaffirming institutional demand, the trade volume has declined, indicating more passive accumulation than active trading.

Glassnode warns that nearly 97% of the Bitcoin supply is currently at a profit, which poses a risk of a sell-off if demand from both retail and institutional investors remains subdued. Without renewed demand, the current cooling momentum may persist. At the time of writing, Bitcoin is trading at $104,457, down approximately 7% from its all-time high of $111,800. This price movement underscores the market's current state of uncertainty and the need for sustained demand to drive further price appreciation.