Bitcoin Market Signals Bearish Calm Before Volatility Surge

• Fewer active addresses and lower transactions suggest traders are in a wait-and-watch mode.

• Early-week price moves can mislead traders, often reversing by week’s end.

• Rising global liquidity may fuel Bitcoin’s next big rebound once market pressures ease.

Bitcoin traders face renewed caution as on-chain and market signals confirm the cryptocurrency remains in a bear market. Analysts report declining network activity, reduced speculative engagement, and defensive positioning among major holders, suggesting low activity may soon precede increased volatility.

According to CryptoQuant analyst GugaOnChain, the BTC: Bull-Bear Cycle indicator, alongside the 30-day moving average (MA_30D) sitting below the 365-day moving average (MA_365D) at -0.52%, confirms that bearish conditions dominate the market.

GugaOnChain highlights the BTC: Highly Active Address metric, which fell from 43.3K to 41.5K, reflecting fewer active traders and institutions. “Historically, when highly active addresses shrink, it signals retreat by traders and institutions, reinforcing the transition into quiet accumulation phases that precede future volatility,” he noted. Transaction counts also dropped from approximately 460K to 438K, while fees declined slightly from $233K to $230K, further indicating reduced speculative activity.

Network Activity Mirrors Past Bear Cycles

The current downturn is similar to those observed in the bear market of 2018. Sharp market swings back then were foreshadowed by fewer active addresses, fewer transactions, and decreasing fees. Despite the low engagement, the user base currently is above 800K, compared to over 600K in 2018, demonstrating structural resilience.

Hence, while the market behaves cautiously, broader adoption may mitigate extreme swings. Moreover, this accumulation phase could lay the groundwork for significant price movements once new catalysts emerge.

Analyst Ardi emphasizes market mechanics in the first two days of the week, pointing to Monday and Tuesday as crucial for gauging BTC’s weekly price action. He explains, “Early in the week, price expands forcefully in one direction, convincing traders that direction has been established. Liquidity builds as stops are triggered and breakout traders commit. As the week progresses, price resolves in the opposite direction and closes on the opposite side of the Weekly Open.” Consequently, traders relying on early-week trends risk falling into directional traps.

Liquidity and Macro Factors Influence BTC

Daan Crypto Trades notes rising global liquidity, fueled by central banks’ expanding balance sheets. He observes, “$BTC is fighting its own fight currently with the 4 year cycle and OG whale selling happening. Once that clears up, I am curious to see how long some type of catch up trade will occur.” Additionally, increasing liquidity could provide BTC with the fuel needed for a recovery or sharp rebound.