Bitcoin faces volatility as it tests the $70,000 resistance, with data showing signs of extreme market stress and potential for a short squeeze. Spot ETF flows turned positive after five weeks of outflows, while the percentage of Bitcoin supply held at a loss entered a historical capitulation zone. On-chain metrics suggest fragile demand but a possible setup for upward price movement.
Bitcoin attempted to breach the $70,000 mark twice in one week, facing rejection amid high volatility not seen since 2022. Short-term holders continued to realize losses, raising questions about seller exhaustion.
The uncertainty in 2026 saw five weeks of sustained Bitcoin Spot ETF outflows, noted crypto analyst Axel Adler Jr. These flows had turned positive again at the time of writing.
The weekly supply in loss reached 46.3%, extending into drawdown territory that has historically marked extreme market stress. It could take weeks and months to reach 60% or higher, which has marked the bottoms of the past two bear markets.
Bitcoin has defended the $60,000 level twice in the past month and made higher lows recently. According to Glassnode, the $70,000 level has remained dominated by profit-taking, underscoring the potential fragility of the current demand.
The 7-day moving average of the taker buy/sell ratio rose above 1, indicating more buying volume. A hike in Open Interest showed speculators expected a breakout past $70,000, one which hasn’t materialized yet.
There appeared to be a cluster of high leverage long liquidations between $65,200 and $67,000. However, the cumulative short liquidation leverage overhead was much higher, potentially setting up a textbook short squeeze.
