Bitcoin's Recovery Lacks Essential Demand, Glassnode Reports

Bitcoin has managed to bounce back to nearly $70,000 after a sudden drop to around $67,000. However, Glassnode, a firm specializing in on-chain analytics, warns that this recovery is missing a vital element needed for a lasting rebound.

Key Takeaways

Bitcoin’s recovery towards $70,000 faces challenges due to a lack of strong demand.
While some market pressures have eased, the current structure has not stabilized sufficiently for a sustainable rebound.
Spot trading volumes are low, indicating limited demand for Bitcoin.
Significant resistance exists above current price levels.
Market conditions remain cautious with a substantial presence of short-term holders which could lead to renewed selling pressure.

Bitcoin's Recovery Lacks Essential Demand, Glassnode Reports

In their latest report dated March 25, titled Awaiting Liquidity, Glassnode pointed out that several factors have improved simultaneously, such as reduced selling pressure, outflows from ETFs, and dealer-driven market imbalances. Despite these changes, low spot trading volumes, limited leverage, and significant overhead supply indicate that the market is not ready for a strong breakout.

Limited Demand for Bitcoin May Restrict Its Growth

Glassnode's primary assertion is that while the market structure has become better, it’s still not enough to conclude that the recent downturn has completely ended. “Bitcoin shows signs of recovery after a sharp decline, with price stabilization, improved ETF flows, and a less one-sided derivatives positioning,” the report explains. “The market's selling pressure appears to be lessening, leading to a more balanced outlook than it had a week ago.”

However, this balance exists within a tight and vulnerable range. Glassnode noted that a new accumulation cluster is forming at current price levels, with buyers from the past one to four weeks having a cost basis around $70,200. While this could provide a support level, it remains fragile due to the modest number of current buyers.

On the resistance front, the situation is more challenging. The cohort of holders from one to three months is positioned around $82,200, while there is a larger concentration of short-term holders between approximately $93,000 and $97,000. Additionally, the report highlights a significant stock of short-term holders above $84,000, which could induce selling pressure if there’s an attempt for a sustained recovery.

The on-chain analysis shows a market under pressure, but not in a state of panic. Relative unrealized losses have stabilized at over 15% of market capitalization in the last two months, a trend similar to what was observed in the second quarter of 2022, although far from extreme capitulation events like the FTX collapse.

Concurrently, the realization of profits has drastically decreased. The average realized profit, adjusted for entities and based on a seven-day moving average, has plummeted from about $3 billion daily in July 2025 to under $100 million now—an astounding drop of over 96%. This indicates a dual scenario: fewer sellers with profitable holdings able to distribute coins, alongside a decline in fresh capital coming into the market.

“Market activity has been relatively quiet since the significant sell-off into the $67,000 range, with total exchange volumes showing minimal increases during the recovery,” the report states.

In comparison to stronger rally phases seen before, current trading volumes are comparatively weak. This indicates that the move back towards $70,000 has relied more on selective buying during dips and short-term adjustments, rather than a broad resurgence in demand.

This is precisely what Glassnode sees as the missing element. While ETF flows have improved slightly, with the seven-day average becoming modestly positive following a long period of outflows, the overall scale of these inflows is still limited compared to previous accumulation periods.

Derivatives markets present a similarly cautious outlook. Funding rates for perpetual contracts remain in the negative, suggesting traders are still paying to maintain exposure to potential price declines. Moreover, futures open interest has remained relatively flat, not growing alongside the recent price bounce. Although the options market is showing less acute stress, it is not indicating strong confidence for significant upward movement either. Short-dated option skews are leaning towards puts, signaling an ongoing demand for downside protection, even as longer-term positions are more balanced.

An important factor to watch in the near term is the weekly, monthly, and quarterly options expiry occurring on Friday. Glassnode observes that dealers are heavily concentrated in short gamma positions between $70,000 and $75,000, with about $10 billion in trades set to roll off. Once this mechanical influence dissipates, BTC may become more reactive to overall macroeconomic and liquidity conditions.

As of now, BTC is trading at $69,961.

Bitcoin price chart
Bitcoin must break above $74,500, 1-week chart | Source: BTCUSDT on TradingView.com