Recently, looking at on-chain Bitcoin data, I increasingly feel that the market has lost its compass.

To be honest, the $79,000 level should have been a support, but now that it’s broken, it feels like the entire expansion phase has been negated. What’s more painful is that the buying pressure from institutional purchases that previously pushed prices higher has now turned into resistance. The net inflow of the US spot ETF has already turned negative, which means the once abundant source of incremental funds has dried up, and the market has lost its main cushion.

I checked the derivatives market, and implied volatility is indeed decreasing, but that’s not a good sign. Investors are closing hedging positions, but no one is willing to open new long positions, reflecting a complete lack of confidence. The technicals point to the $54,900 historical bottom zone, where the most severe correction in history ended. Right now, it looks like the market is oscillating between compression and surrender.

The macro environment is even more distressing. The Federal Reserve’s hawkish stance and uncertain rate cut prospects are like a glass ceiling pressing down on risk assets, with Bitcoin, a high-risk asset, bearing the brunt. In an environment of policy uncertainty, institutional appetite is already limited.

But it’s not all bleak. I’ve noticed indicators like "Coin Burn Day" are improving, suggesting long-term holders have stopped selling off heavily. This usually indicates we might be in the late stage of a bear market, and although the process is tedious, it’s often the phase before the final bottom forms. Currently, BTC is fluctuating around $74.94K, with short-term volatility, but this dull consolidation may be brewing the next opportunity.

Overall, the market now feels like groping in the dark, waiting to find that compass again.