Quick Summary
- Bitcoin has stabilized around the True Market Mean, a key support level historically separating light bear markets from deeper ones.
- Over 25% of Bitcoin’s total supply is currently underwater (trading below the purchase price).
- Spot demand has weakened, evidenced by net outflows from U.S. Bitcoin ETFs and negative Cumulative Volume Delta on major exchanges.
- Derivatives markets show reduced leverage and neutral positioning, indicating a lack of strong conviction from traders.
- Implied volatility in Bitcoin options has decreased, reflecting reduced short-term uncertainty following recent price swings.
- Long-term investors are selling at shrinking margins, suggesting a potential easing of selling pressure from this group.
Bitcoin Price Action and Key Support Levels
Bitcoin has spent the last two weeks treading water near a critical price zone that evokes both respect and apprehension among traders. This area represents the True Market Mean, calculated as the cost basis of all active coins minus miners. Currently, the price is holding just above this significant level.
On-chain data from Glassnode indicates that this True Market Mean historically serves as a pivotal point, differentiating between lighter bear market phases and more severe downturns. The current price action, hovering just above this threshold, bears a striking resemblance to the patterns observed in the first quarter of 2022.
More than 25% of Bitcoin’s total supply is now trading at a loss, with the spot price falling below the 0.75 supply quantile in mid-November. This metric, currently sitting near $96.1K, highlights the extent to which many investors are currently underwater.
📊 Understanding supply quantiles helps identify price levels where significant portions of Bitcoin supply are held. Moving below lower quantiles suggests more holders are at a loss, potentially increasing selling pressure if they decide to exit positions.
Another critical level to watch is the 0.85 quantile, situated around $106.2K. Until Bitcoin’s price decisively reclaims this zone, the market will remain highly susceptible to broader macroeconomic shocks dictating its direction.
On-Chain Metrics: Stability and Investor Behavior
Despite the downward price pressure, fundamental on-chain data suggests that a complete collapse may not be imminent. The Net Change in Realized Cap for Bitcoin, a measure of net value added to the network, is currently reading +$8.69 billion per month.
While this figure is considerably weaker than the peak of $64.3 billion per month seen in July, it remains positive. As long as this metric stays above zero, Bitcoin has a foundation to build upon rather than facing a complete unraveling of its market value.
💡 A positive Net Change in Realized Cap indicates that new value is being added to the Bitcoin network, often through new investments or retained earnings. A sustained positive trend is a sign of network growth and potential price appreciation.
Meanwhile, long-term investors appear to be easing their selling pressure. While they continue to offload assets into upticks, the margins are shrinking. The Long-Term Holder SOPR (30-day Simple Moving Average), a metric that shows profitability for long-term holders, currently stands at 1.43.
Derivatives and Options Markets Signal Cautious Sentiment
The demand side of the Bitcoin market is showing signs of fatigue. U.S. Bitcoin Exchange-Traded Funds (ETFs) experienced net outflows throughout November on a three-day average basis, a stark contrast to the consistent inflows that previously supported prices earlier in the year.
This reversal in ETF flows, affecting numerous issuers simultaneously, suggests institutional investors are pulling back amid increasing market pressure. This reduction in institutional buying leaves the spot price more vulnerable to external shocks and volatility.
📌 The shift from consistent inflows to outflows in Bitcoin ETFs is a significant indicator of changing institutional sentiment. It suggests a less optimistic short-term outlook and a potential decrease in readily available demand for Bitcoin.
In parallel, the Cumulative Volume Delta (CVD) on major exchanges like Binance has turned negative, signaling persistent selling pressure from market takers. Coinbase also showed a flattening trend, eroding a key indicator of robust U.S. bid strength. With both ETF flows and CVD reflecting defensive behavior, overall spot demand appears thin.
The derivatives market has mirrored these trends, with futures open interest declining through late November. This unwind has been gradual and orderly, indicating that the significant leverage built up during the previous uptrend has largely dissipated. New leverage is not entering the market, and funding rates have cooled to near zero after months of positive prints.
Occasional modest negative funding rates have appeared but haven’t persisted, suggesting that short-sellers are not aggressively positioning themselves. Overall, positioning in the derivatives market appears neutral and flat.
In the options market, implied volatility has decreased following a recent spike. Bitcoin’s failure to maintain its price above $92K led sellers to re-enter, causing short-dated volatility to drop from 57% to 48%, mid-tenor from 52% to 45%, and long-dated from 49% to 47%.
📍 A drop in implied volatility suggests that market participants expect less price movement in the near future. This can be a sign of cooling sentiment or a period of consolidation before the next major price move.
Short-term skew, which measures the premium paid for downside protection (puts) versus upside potential (calls), has also fallen from 18.6% to 8.4%. This decline occurred after Bitcoin rebounded from $84.5K, a move influenced by a shock in Japanese bonds. Longer-term maturities saw slower adjustments, indicating that while traders sought short-term gains, there was lingering uncertainty about sustained upward momentum.
Early week options flow showed a heavy bias towards put buying, fueled by fears of a repeat of the August 2024 carry-trade stress. As prices stabilized and a rebound occurred, the flow shifted towards call buying.
Despite the rebound, at the substantial $100K call strike, the volume of call premiums sold still exceeds that of call premiums bought, with the gap widening recently. This suggests weak conviction among traders to push Bitcoin back into six figures. Furthermore, traders appear hesitant to chase upside ahead of the upcoming FOMC meeting.
Entrepreneur Lark Davis noted the unusual timing of major financial institutions like Charles Schwab, Vanguard, and Bank of America rolling out crypto services to their clients concurrently with significant market movements, highlighting a potential confluence of events.
Frequently Asked Questions about Bitcoin Price Action
What is the True Market Mean for Bitcoin?
The True Market Mean is an on-chain metric representing the cost basis of all active Bitcoin coins, adjusted by subtracting the cost basis of miners’ coins. It’s considered a significant psychological and technical support level.
Why are U.S. Bitcoin ETFs seeing net outflows?
Net outflows from U.S. Bitcoin ETFs can be attributed to various factors, including increased market pressure, institutional investors reassessing risk, and a general cooling of speculative interest following periods of significant price appreciation.
What does a negative Cumulative Volume Delta (CVD) indicate?
A negative CVD suggests that more Bitcoin is being sold at the ask price (taker selling) than being bought at the bid price (taker buying) across exchanges, indicating bearish pressure and a potential for price declines.
How does options skew affect Bitcoin price?
Options skew indicates the relative demand for put options (bearish bets) versus call options (bullish bets). A high positive skew suggests investors are paying more for downside protection, reflecting fear or caution. A falling skew, as seen recently, can indicate reduced fear or increased confidence in an upward move.
Is Bitcoin consolidating or entering a deeper bear market?
Current data shows Bitcoin consolidating above a critical support level (True Market Mean), with some weakening on-chain and derivatives metrics. While not yet a deep bear market by historical standards, the lack of strong buying conviction suggests caution is warranted, and a break below key support could signal further declines.
Bitcoin Market Outlook
Bitcoin is currently navigating a sensitive phase, finding support near a historically significant on-chain metric. While immediate selling pressure seems to be easing from long-term holders, broader market demand, particularly from institutional players via ETFs, has diminished.
The derivatives and options markets reflect a muted sentiment, with reduced leverage and a lack of conviction for a strong upward push. The price remains vulnerable to external macroeconomic forces until a clear breakout above key resistance levels occurs.
Investors are closely watching for signs of renewed buying interest and a sustained reclaim of higher price levels. The stability above the True Market Mean offers a glimmer of hope, but a definitive shift in market sentiment will be required to propel Bitcoin to new highs in the near future.
