Bitcoin Market Fragile: Oversold RSI & Rising Funding Rates
Glassnode’s latest Market Weekly report shows the Bitcoin market turning fragile. Last week, the spot RSI entered oversold territory, and price momentum softened. Cumulative selling intensified while trading volume remained steady but lackluster. This suggests weak buyer confidence in the Bitcoin market. On-chain data reveal muted ETF flows and slowing capital inflows. Futures open interest contracted, pointing to reduced leverage. Meanwhile, funding rates are elevated, reflecting extended long positioning. In the options market, open interest rose modestly as the volatility skew narrowed and the 25-delta skew increased. This highlights growing demand for downside protection. Taken together, these indicators point to a more fragile market structure. Weaker on-chain demand, compressed profitability, and lackluster inflows add to potential volatility. Near-term direction will hinge on whether marginal liquidity returns to stabilize prices or if heightened volatility drives deeper consolidation in the Bitcoin market.
Bearish
The Glassnode report highlights multiple bearish signals in the Bitcoin market. An oversold RSI indicates that selling pressure has peaked, similar to the downturn seen in June 2022. Elevated funding rates suggest traders hold extended long positions, increasing the risk of a liquidations-driven sell-off if prices slip further. Rising demand for options hedging shows growing risk aversion among investors. On-chain data revealing muted ETF flows and slowing capital inflows further erode support levels. Reduced futures open interest points to lower leverage and fewer speculative bets. Historically, these combined factors have preceded deeper consolidation or declines rather than sustained rallies. In the short term, traders may face heightened volatility and downward pressure. Over the long term, restoring liquidity and buyer confidence is necessary to stabilize the market and drive a rebound.