The current crypto market environment shows a transition from an aggressive bearish phase to a neutral-bullish scenario. A key indicator of this process is a noticeable reduction in leverage amid weakening short-term selling pressure. Based on my analysis of on-chain data, the market is shedding excessive speculative optimism, creating a healthier foundation for a potential recovery.
Inflow Dynamics and Liquidity
Analysis of fund flows to centralized exchanges presents a contradictory but encouraging picture. Over the past week, net inflows amounted to approximately 2,196 BTC, yet over a 14-day period, net outflows remain at around 8,197 BTC. This dynamic points to a phase of volatile liquidity adjustment rather than the formation of a clear trend. Long positions still hold a slight advantage, but excessive margin burden and over-optimism have significantly weakened. Meanwhile, open interest in derivatives is gradually rising, indicating a return of capital, but with a more measured approach.
Probability of a Bullish Scenario and Stabilization
Based on available data, I estimate the probability of a positive development for the Bitcoin market at roughly 55%. To confirm this scenario, it is necessary to closely monitor the funding rate and exchange flows. Concurrently, the market is gradually absorbing the aggressive selling typical of the bearish phase. However, holders are still recording more losses than profits. This is a classic sign of an early stabilization stage, where the bottom is not yet fully formed, but selling pressure is waning.
Cyclical Parallels and Price Forecast
Historical parallels deserve special attention. Analysis of the weekly bullish divergence shows that in 2022, it persisted for 161 days before sustainable growth began. In the current cycle, a similar period has lasted 147 days. If history repeats itself, the correction should conclude with a new local low, which will become the cycle's bottom. Based on this model, the target bottom range could be in the zone from $45,000 to $65,000. This is further supported by the second consecutive positive week for spot Bitcoin ETFs, which attracted net inflows of $75.5 million from July 13 to 17.
My Comment: The market is in a delicate transition phase. The reduction in leverage is a positive signal, but the lack of confident accumulation and ongoing losses among holders indicate that a full reversal is still far off. The key level to confirm a bullish scenario is breaking through the $65,000 zone followed by consolidation. Until this happens, any upward movement should be viewed as a correction within a broader downtrend.