Tony Kim
Dec 04, 2025 17:40
Bitcoin stabilizes above key levels, yet market dynamics echo early 2022 with over 25% supply underwater. Demand weakens across ETFs and futures, posing risks.
Bitcoin’s market dynamics are currently echoing early 2022, with significant portions of supply underwater, according to Glassnode. Despite stabilizing above the True Market Mean, which acts as a critical valuation anchor, over 25% of Bitcoin’s supply is still underwater, reflecting a fragile market structure susceptible to macroeconomic shocks.
On-Chain Insights
The True Market Mean, representing the cost basis of all non-dormant coins, has been a pivotal level for Bitcoin, marking the line between a mild bearish phase and a deeper bear market. Recently, Bitcoin’s price has stabilized above this threshold, yet the broader market structure mirrors the dynamics of Q1 2022. The Supply Quantiles Cost Basis Model highlights that the current price level places a significant portion of supply at risk, with more than 25% underwater, creating a precarious balance between potential seller exhaustion and further downside risk.
Off-Chain Indicators
Off-chain metrics further underline the market’s vulnerability. Bitcoin ETFs have experienced negative net flows, a stark reversal from earlier positive trends, indicating reduced institutional demand. This softening demand is mirrored in the spot market, where the Cumulative Volume Delta (CVD) shows a persistent negative trend, reflecting increased sell pressure.
Derivatives Market Overview
In the derivatives market, futures open interest has declined, suggesting a cautious stance among traders. Funding rates have settled into neutral territory, indicating an absence of aggressive positioning. Options markets show compressed implied volatility and a shift in trader behavior, with a preference for cautious call selling over put buying, reflecting a more defensive market sentiment.
Market Outlook
To stabilize the market structure and reduce downside risks, holding within the 0.75-0.85 quantile band, priced between $96.1K and $106K, is crucial. This range is seen as a potential bottom-formation zone, unless disrupted by negative macroeconomic catalysts. Meanwhile, the current capital momentum, though weaker than earlier in the year, remains slightly positive, offering some support against a deeper market breakdown.
As the year draws to a close, Bitcoin’s market remains in a delicate balance, with its future trajectory largely dependent on reclaiming key support levels and the re-emergence of stronger demand signals.
Image source: Shutterstock