On-chain data suggested Bitcoin may be approaching a bottom, with the potential for a recovery, especially looking at stock market activity and transaction behavior.
At the time of writing, Bitcoin [BTC] was trading around $66,000 after falling last week as tightening macroeconomic conditions and persistent geopolitical uncertainty weighed on risky assets.
Are speculative traders leaving the market?
The Bitcoin Fund Flow Ratio, which tracks network activity relative to currency flows, indicates that the market is at a decisive point.
At the time of writing, the benchmark stood at 0.065, a level that historically serves as a pivot point for price direction.
This bandwidth has often served as a support zone, where Bitcoin stabilizes before a bullish reversal takes hold. Similar patterns emerged between late 2017 and early 2018, and again in 2019, 2020 and 2023.
The arguments for a possible recovery rest on declining speculative activity and improving supply dynamics on the stock exchanges. With fewer speculative trades and more stable supply conditions, the market structure is starting to favor a bullish stance.
However, the Fund Flow Ratio is not fixed at this level. A decline would shift the outlook and open the door for continued distribution.
In that scenario, increased selling activity and renewed speculative pressure could increase Bitcoin’s downside.
Bitcoin fees indicate cooling activity
Additional indicators within the chain strengthen the possibility of a recovery, although they also point to weakening participation.
Bitcoin transaction fees, measured in USD, have fallen to one of their lowest levels in six years.
This decline reflects conditions last seen in 2022, just before Bitcoin made a notable recovery.
Low transaction costs typically reflect reduced demand in the chain as fewer participants actively transact.
This suggests that many traders have either stepped back from the market or have already reallocated their holdings across the exchanges, in line with signals from the Fund Flow Ratio.
If Bitcoin stays around current levels, the chances of a recovery remain intact. Still, any meaningful recovery will depend on renewed capital inflows.
Bitcoin capital remains thin
Spot market activity, a key indicator of retail participation through currency inflows and outflows, remains weak.
Over the past week, the market has shown limited buying and selling pressure. As of April 1, net inflows were approximately $71 million, indicating relatively low sell-side activity.
However, since March 30, liquidity has been tilting toward sellers, with approximately $108 million worth of Bitcoin being distributed to the market.
Until stronger capital inflows return, the likelihood of a sustained recovery remains limited, even as signals up the chain begin to point to a potential bottom.
Final summary
- Bitcoin [BTC] traded around $66K after a macro-driven pullback, with conditions pointing to a possible bottom formation.
- Spot market activity remains weak, with weak inflows and limited buying pressure limiting upward momentum.