What’s Happening
Price Action
BTC price action has continued to spook the market over the past week. The downward movement has seen BTC tumble -6.33%.
Figure 1: BTC price has dropped down for a second week in a row.
From a technical analysis perspective, BTC has moved from our first key moving average, the 128-day moving average, down to our second, the 200-day moving average.
Figure 2: BTC now at the 200-day moving average.
After crashing through the 200-day moving average at the end of last week, BTC has now reclaimed it, which is an encouraging sign but BTC will now need to hold that level into this week and then reclaim the 128-day moving average (now at $113,500) for significant confidence to return.
The Big Story: Local Lows Or Bigger Downtrend
Now that Bitcoin’s price has dropped back to its 200-day moving average, traders are asking: is this the start of a deeper correction, or just another local low before the next leg higher?
Fear has returned to the market. Funding rates across major derivatives exchanges have turned negative, meaning traders are paying to stay short. In a bull market, this can often be a contrarian signal when sentiment becomes too bearish; it tends to mark the point of exhaustion before a reversal.
Notably, even Binance, the most retail-driven exchange, has now seen sustained negative funding, something rarely seen during bullish phases.
Figure 3: Binance Funding Rates consistently negative for more than a week.
At the same time, the Fear & Greed Index has been back in fear territory for two straight weeks, showing widespread uncertainty just as many expected the next bullish phase to begin.
Figure 4: Fear & Greed Index in Fear.
While it’s possible that Bitcoin is entering a broader bearish trend, BM Pro data suggests that the greater possibility continues to be a bullish correction. We’ve noticed that three or more consecutive days of outflows from the IBIT Bitcoin ETF often mark capitulation areas where sentiment is overly fearful, right before price reverses higher.
This pattern has repeated multiple times since the ETF launched. We have seen it happen again right now. While it’s a little early to have high confidence in this metric, it is certainly one to keep an eye on as we get more IBIT ETF data over time.
Figure 5: IBIT Bitcoin ETF Inflows/Outflows
Additionally, BM Pro subscribers have been receiving local-low alerts such as signals from the Active Address Sentiment Indicator, which shows price drops reaching extremes relative to on-chain activity. Historically, that has coincided with local lows, whether in bull or bear markets.
Figure 6: Active Address Sentiment Indicator
For now, keep an eye on the 200-day moving average. If BTC can continue to hold above it in the coming weeks, it would confirm renewed strength.
Lose that level, and the next major support lies near the 1-year moving average, currently just above $100K.
Now is the time to stay alert as markets like this often set the stage for the next big move.
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The Bitcoin Magazine Team.