Spot market conditions are concerning: three major signals reveal the market's fragile underlying tone

According to the latest report from on-chain data analysis platform Glassnode, the Bitcoin market is at a delicate turning point. Although trading volume has rebounded slightly from weekly lows, indicating a preliminary rebuilding of liquidity, behind this seemingly positive signal, the spot market remains fraught with concerns. The data reveals a complex market landscape: on the surface, there are signs of increased participation, but the underlying market structure is quietly deteriorating.

Liquidity Rebound Cannot Mask Spot Market Weakness

The rebound in trading volume should be a sign of market recovery, but Glassnode’s spot CVD (Cumulative Volume Delta) data tells a different story. The CVD indicator shows deterioration, meaning sellers are gradually gaining pricing power. Meanwhile, short-term market participants are becoming more defensive, with investors generally inclined to wait and see rather than actively engage. This phenomenon reflects a weakening confidence among market participants; despite increased trading activity, the quality is declining.

Bitcoin Price Fluctuates, What Is the Confidence in the Spot Market?

As of January 21, the latest data shows Bitcoin at $89.91K, up 1.98% in 24 hours. However, this rebound has not changed the market’s fragile state. Looking back at recent trends, Bitcoin has faced resistance around the $90,000 level and entered a consolidation phase. Technically, the 14-day RSI (Relative Strength Index) has fallen back into the neutral zone, indicating a cooling of upward momentum. The current price oscillates within the $80,000 to $90,000 range, and the market seems to be in a state of hesitation. This consolidation is not just sideways price movement but a process of re-evaluating confidence in the future direction.

Derivatives Market Divergence, Institutional Investors’ Attitude Shift

The derivatives market shows clear signs of divergence. Open interest in futures contracts has risen slightly, indicating a mild increase in speculative participation. At the same time, long funding rates have surged, suggesting that investors are more willing to pay premiums to gain bullish exposure. However, this apparent optimism is challenged by the fact that the perpetual contract CVD has turned deeply negative—indicating that sellers in the leveraged market still wield strong selling pressure.

More concerning is the performance of US spot ETFs. Their net inflows have shifted to significant net outflows, exceeding statistical extremes, which signals that institutional investors are engaging in substantial de-risking operations. Although ETF trading volume has increased, reflecting active repositioning, the profit levels of ETF holders remain high, maintaining elevated risk of profit-taking. This suggests that institutions are opting to lock in gains.

Where Is the Market Breakthrough? What Signals Are Needed?

Overall, the market is in a fragile consolidation phase. While initial signs of participation rebuilding are emerging, three major factors constrain the formation of a sustainable upward trend: first, the degree of de-risking among institutional investors remains high; second, the options market positioning leans toward defensiveness; third, retail and speculative sentiment remains sensitive and volatile.

To re-establish a sustainable upward trend, the market needs a demand-side revival driven by improvements in the spot market conditions. This means seeing genuine liquidity stabilization, continued influx of spot buying, and gradual restoration of market confidence. Until these conditions are met, the fragility of the spot market will continue to limit the overall upward potential.