Bitcoin fell to a year-to-date low of $74,500 on Monday, a move that wiped away about 38% of its peak. Markets reacted sharply and traders felt the pressure as outflows from major funds accelerated.
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Fund flows and market sentiment
According to reports, global crypto exchange traded products saw major drawdowns over the past week. Great USA Spotting ETFs led the sale, pushing overall cash flows into deep negative territory.
Based on Bitwise’s weekly Crypto Market Compass reportBitcoin’s recent decline pushed the two-year rolling MVRV z-score to a record low, a level associated with undervaluation and indicating selling conditions for the asset.
The sentiment meters dropped sharply. Reports note that a two-year rolling MVRV z-score – a measure that compares the market price to the average cost basis of holders, adjusted for volatility – reached its lowest value ever. Those kinds of numbers indicate widespread selling and prices that many investors now see as worrying.
Buy interest on the spot market
In the shorter term, signs of buying have appeared. The daily RSI fell into the low 20s. This is a level that was often followed by quick rebounds.
Spot volume data on major platforms like Binance and Coinbase showed net aggressive buying Bitcoin bounced back to around $79,420.
Open interest didn’t peak. The financing interest rate remained negative. In plain terms, people bought in the spot market rather than piling into leveraged long bets, reducing the chance of a cascade of forced liquidations that could make moves messier.
Capitulation and liquidations
According to reports, long positions were crushed last week, with nearly 2 billion in long liquidations of BTC recorded in the derivatives markets. That pain can clear the field for new entrants.
At the same time, there are several billion dollars of short positions clustered near higher price levels, around $85,000, that could be hit if Bitcoin rises. Short covering could add fuel to a rebound. The market structure now offers a mix of strong selling behind prices and real buying in front.
Where support could exist
Based on reports, buying interest combined with very low valuation numbers could create an asymmetric trade. That means the potential upside could outweigh the downside in the short term, at least for traders willing to accept volatility.
Historically, the past week’s dips in the RSI zone since August 2023 have usually led to around a 10% recovery, although outcomes vary and nothing is guaranteed.
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A silent but real conclusion
Institutional flows remain cautious. Major products such as the Grayscale Bitcoin Trust and the iShares Bitcoin Trust recorded significant outflows, indicating that some large holders were taking a step back.
Still, signals on the chain and spot volume indicate that the bargain hunt has begun. The near-term path will likely be bumpy. Traders seeking exposure will have to weigh the low valuation metrics and buying potential against the very real possibility of further weakness if sentiment deteriorates again.
Featured image from Vecteezychart from TradingView