Woofun AI reports that Bitcoin is undergoing a structural shift in its bottoming process, characterized by cooling panic selling from long-term holders and a pivot in macroeconomic drivers. This analysis, originally compiled by Glassnode and AididiaoJP for Foresight News, highlights that while the market floor is still being established, the nature of the support is evolving. The intense selling pressure from experienced investors has begun to subside, allowing buying interest to absorb the price lows recorded in June. Consequently, prices are gradually ascending, challenging previous resistance zones that had suppressed upward momentum.

The market is currently testing upper resistance levels, with Bitcoin’s response to weak inflation data proving significantly stronger than that of any major stock index. This reaction marks the most positive response to favorable news in weeks, indicating a decoupling from traditional equity markets. While the correlation with stock markets weakens, the inverse relationship with the US dollar deepens, suggesting that liquidity rather than risk-on sentiment is the primary driver.

Selling from long-term holders, which was the main source of downward pressure earlier this year, has declined from its peak. Profit-taking has diminished, and buying pressure has fully absorbed the sell-offs at June’s lows, reducing supply pressure during rallies. Short-term holders’ average cost basis sits around $69,000, serving as the break-even point for recent buyers and the next key resistance level. Derivatives traders are closing short positions, but spot buyers have not yet followed suit, creating a disconnect in the current recovery.

Macro insights reveal that the pressure on Bitcoin this quarter stems primarily from real interest rates rather than risk aversion. The 10-year real yield has risen to approximately 2.4%, nearing its 2026 high, while the US dollar has remained above its 200-day moving average since May. Despite these headwinds, broader risk assets show no signs of stress, with stock markets near highs, credit spreads low, and volatility moderate. Bitcoin led the rally following the release of mild inflation data on Tuesday, outperforming all other major assets. It surged rapidly after the data release, leading significantly ahead of U.S. and European stocks throughout the week. After a month of consolidation at lower levels, the market has once again responded positively to positive news. This sensitivity signals that sellers are exhausted and buyers are waiting for a catalyst.

Behind the rally, Bitcoin’s driving forces are shifting. Since winter, its correlation with U.S. stocks has continued to weaken, while its inverse relationship with the US dollar has deepened. Bitcoin increasingly resembles an asset that strengthens when the dollar weakens, rather than a proxy for stocks. Although it remains part of the risk asset category, the influence of the dollar and liquidity channels now exceeds that of stock market sentiment. If the macro environment eases from here, these channels are likely to be the first to respond, potentially driving further price appreciation.

On-chain insights depict the current position between floor and ceiling. Bitcoin’s price is above the network’s average realized price, a natural bottom support in a bear market, and below the cost basis of short-term holders, which is around $69,000. This level represents the average entry price for buyers over the past five months. The current recovery is moving toward this break-even resistance level, where many trapped buyers are waiting to exit. A first encounter with this level is likely to trigger a strong reaction, as it is precisely the group most inclined to sell who are closest to breaking even.

A successful recovery would open up room for further gains; if not, the range-bound pattern will continue. Sellers have stopped taking profits, with relative profit/loss indicators showing that long-term holder sales are now mostly losing positions. Lossy sales by both groups constitute the main trading feature on-chain, a typical sign in the later stages of a bear market. The key change is that the proportion of sales by long-term holders has stopped growing, and the wave of selling that accompanied each rally this year is no longer expanding.

The pace of selling is the most important indicator at present. The adjusted long-term holder realized loss indicator, which excludes internal transfers, truly reflects the actual amount given up by experienced sellers daily. This indicator hit its cycle peak two weeks ago, and we explicitly stated in last week’s report that a cooling of this indicator is a prerequisite for any sustainable recovery. It has now begun to decline. One decline does not prove complete exhaustion, as new shocks could still restart selling. But in this cycle, this is the first time the core indicator defining the bottom-building process has shifted from rising to falling. The main sellers driving this bear market are gradually running out of strength.

As experienced sellers give up, buyers enter the market in a timely manner. The cumulative trend score categorized by wallet size shows that there was a widespread and strong buying surge during June’s lows, involving wallets of all sizes, from small to large. After prices stabilized, this intensity weakened, and the market entered a wait-and-see mode. The coins sold at lows found buyers. Whether these buyers can return with equal strength in the next move will determine whether this bottom can be held.

Woofun AI data shows that the absorption of supply at these levels is critical for confirming the structural shift.

Off-exchange and derivatives insights reveal that ETF outflows are slowing down. U.S. spot ETFs tell a similar story of easing pressure but not yet resolution. Redemption pressure has dropped significantly from June’s extreme levels, indicating stabilization.

However, the channel has not fully recovered: one day this week saw the largest single-day outflow in weeks, followed by partial reinvestment the next day. Until inflows truly return and stabilize, this remains a market where institutions have stopped fleeing but have not yet started buying. Shorts are giving up resistance, with the options put/call ratio falling to its lowest level this year. Traders are letting their short protections expire, and perpetual contract funding rates are only slightly above neutral, far from crowded bullish levels. Bearish bets are quietly withdrawing, but this liquidation has not led to actual buying. Adjustments by futures and options traders do not equate to capital flowing into the spot market, which is the clearest warning in the current recovery.

Volatility and options data show that the premium for crash protection, measured by the 25-Delta Skew, soared during June’s sell-off and has since continued to fall, now well below February’s extreme levels. The cost of hedging against each correction is significantly lower than it was a month ago. Demand for protection still exists, as it should be without a confirmed bottom, but the overall trend is moving toward normalization.

Bitcoin is approaching Max Pain, the price of the largest portion of outstanding options that will expire worthless. Spot prices have fluctuated around this level this year, and Bitcoin is currently below it, making an attempt to break through it for the first time in weeks. Historically, breaking through Max Pain often coincides with a shift toward a more favorable market environment, although the transition takes time.

Successfully reaching this level would be the first structural signal for an upward breakout from the range; if not, it would confirm the cautious sentiment still priced into the options market. Absolute crash protection costs also confirm an easing trend, with the price for crash protection steadily declining over a month. The Bitcoin Volatility Index (DVOL) is near a one-year low, and the severe bearish pressure seen in February and June has faded from the volatility curve.

Such compression rarely lasts long; it usually serves as the backdrop before the next decisive market move begins.

The bottom is still being formed, and it has begun to respond this week. Long-term holder panic selling has declined from its peak, profit-taking has dried up, and June’s lows were absorbed by widespread buying. Bitcoin’s reaction to macro-positive news has been stronger than that of other assets. It is approaching Max Pain from below and nearing the cost basis of short-term holders above—that will be the first real test for the recovery.

Confirming signals have not yet appeared: ETF outflows have slowed but not reversed, derivative liquidations lack follow-through from the spot market, and volatility compression awaits a catalyst. The key signal to change our outlook is spot-driven buying that pushes prices to effectively break through and hold above the cost basis of short-term holders. If long-term holder losses accelerate again, or prices are pushed back near the realized price, the market will return to range-bound movement. The foundation has been laid, but the follow-through has not arrived yet.