The market is once again stuck in the classic battle between fear and greed.
Currently, Bitcoin is at the center of that battle. Technically, BTC has lost its mid-April support around $73,000, with the price already falling 4.78% this week and the latest sell-off pushing the fuse to $72,000.
More importantly, the weakness now extends to on-chain data. As the chart below shows, approximately 42% of Bitcoin’s circulating supply is currently at a loss.
That’s more than 8 million BTC underwater, with most of these coins likely held by short-term holders entering the market at an unfavorable level.
Against this backdrop, Bitcoin’s descent into “fear” could not have happened at a more critical time.
Typically, it’s the fear phases where smart money panics, allowing the price to stabilize before the next FOMO-driven move up. But this time, institutional flows do not seem to follow that pattern.
According to LookonchainBlackRock moved $157 million worth of BTC around the same time Bitcoin posted an intraday drop of almost 5%. In that context, the current fear looks more like capitulation than trust.
Ironically, it may not be fear that becomes Bitcoin’s fear [BTC] biggest problem, but greed.
Take advantage of spikes as on-chain sentiment weakens for Bitcoin bulls
Zooming out, Bitcoin shows a clear difference across multiple time frames.
Technically, BTC is largely playing the typical May setup. After April’s strong rally, the market entered May more cautiously, and Bitcoin has followed that path with a 3.5% correction year to date, its weakest monthly ROI since February.
But the story changes in the higher time frame.
Despite the monthly decline, Bitcoin is still up almost 8% this quarter. In fact, the second quarter is shaping up to be BTC’s strongest quarter since Q2 2025, when the price exploded nearly 30% higher.
That said, as the signals in the chain weaken and Macro conditions still look shakyIt might be too optimistic to expect Bitcoin to repeat this kind of aggressive rally in the second quarter.
But traders don’t seem to be pricing in that risk.
As the chart above shows, an analyst recently saw a Bitcoin whale opening a huge $30 million long position with 40x leverage.
More importantly, the liquidation level is around $72.4k, meaning even a relatively small downward move could wipe out the trade.
That puts even more pressure on Bitcoin’s already vulnerable setup.
Right now, greed in the derivatives market is still looking good, with leveraged long positions continuing to pile up despite increasing signs of weakness across the market.
In that context, if fear continues to rise while leverage remains overheated, Bitcoin could be setting itself up for a much sharper pullback than most traders expect.
Final summary
- Bitcoin’s on-chain weakness is increasing as more than 42% of the supply suffers losses, while sentiment is sliding into fear.
- At the same time, leveraged long positions continue to pile up in BTC perpetuals, raising the risk of a sharper liquidation-induced pullback.