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Bitcoin posted a strong rally this week, briefly approaching $70,000 before pulling back. This move has sparked a debate in the market: Has Bitcoin finally bottomed, or is it just a temporary recovery in a broader bearish phase?
Several indicators on the chain, derivatives and institutions indicate the first signs of stabilization. However, key signals still point to a fragile recovery rather than a confirmed bullish reversal.
The options market shows fragile conditions, not strong support
Bitcoin options positions have recently shifted into what traders call a “negative gamma” mode, according to a gamma heatmap from GlassNode.
In simple terms, range measures how options market makers manage risk. When Bitcoin is in negative range, dealer coverage usually amplifies price movements.
This means that spikes can accelerate quickly, as can pullbacks.
The heat map also shows the scarcity of “gamma walls” of strong resistance above current prices. This creates less friction for upward moves, which helps explain Bitcoin’s sudden rise.
However, it also means that the market lacks structural stability.
In the absence of strong hedging support, Price movements remain fragile It is reversible.
Spot demand for Bitcoin improved for the first time in months
Cryptoquant data indicates that The apparent demand for Bitcoinwhich measures net accumulation versus new supply, turned positive for the first time since November.
This is an important initial signal. When demand exceeds supply, this indicates that buyers are starting to step in and absorb coins from sellers.
However, a single positive signal does not confirm a complete reversal. During previous bear markets, orders often increased temporarily before further consolidation.
Continue to follow the rising demand trend over several weeks, as this will provide stronger confirmation.
Short-term investors always sell at a loss
Another key indicator is the P&L data for short-term holders, which tracks whether new investors are selling at a profit or a loss.
The data suggests that short holders have been selling at a loss consistently since late January. The period at the beginning of February saw several waves of large losses, and this period was repeated recently.
This pattern is seen as a capitulation as weaker investors withdraw from the market. The yield usually lies near the bottom, because the strongest buyers absorb these losses.
Note that the signal is not completely reflected.
Analysts warn that until short holders start selling at profits again, the rallies could become “liquidity exits,” meaning stuck investors sell to market force instead of holding.
Technical and historical data indicate that selling pressure has eased
Bitcoin’s Relative Strength Index (RSI), a momentum indicator, has been rising recently after reaching highly oversold levels in early February, indicating weak selling power.
Past experience has shown that RSI recoveries often lead to short-term rebounds.
Bitcoin’s quarterly performance also revealed that it rarely experiences multiple consecutive quarters of significant losses.
Although it does not guarantee the formation of a fund, it supports the view that the market can enter a phase of stabilization.
Institutional flows continue to show weakness
Make sure institutionalization remains a major concern. Previous data has shown that Bitcoin ETFs have seen sustained flows, and SEC filings have revealed that large investment advisors and hedge funds have significantly reduced their exposure by the end of 2025.
This indicates that institutional demand has not yet been fully restored. Strong bull markets usually require sustained flows from large investors.
The first signs of a bottom is reached, but the bull market is not confirmed
Bitcoin is showing some early signs of a bottoming out. Spot demand is improving, capitulation seems to be absorbed, and technical indicators suggest selling pressure is easing.
However, key signs of confirmation remain missing.
Short-term Bitcoin holders remain in the loss zone, institutional flows remain weak, and the structure of the options market shows fragile conditions.
Bitcoin’s rise is currently more in line with a temporary bounce to ease pressures rather than a confirmed bullish reversal.
A sustained recovery will likely require stronger demand, renewed institutional flows and price stability above key resistance levels.
