Bitcoin has struggled to reclaim its previous all-time high (ATH) of over $109,000, staying below the $90,000 mark for nearly two weeks. Despite reaching the ATH in January 2025, Bitcoin has faced persistent bearish pressure, causing uncertainty in the market regarding whether the current bull market has ended or if a new rally could push Bitcoin to fresh highs.

One significant development influencing the market is a 35% drop in Bitcoin’s open interest, which has fallen from $57 billion to $37 billion since the ATH. Open interest refers to the total value of outstanding derivative contracts, and such a sharp decline indicates a reduction in speculative trading and hedging activity. Glassnode, a blockchain analytics firm, highlighted that this reduction in open interest mirrors broader trends of decreasing on-chain liquidity, signaling risk-off sentiment among investors.

The drop in open interest also indicates that traders may be unwinding cash-and-carry trades, where they previously profited from price differences between the spot and futures markets. This unwinding suggests a weakening long-side bias, further contributing to downward pressure on Bitcoin’s price. Additionally, Bitcoin ETFs have seen outflows, and CME futures closures have added to the negative sentiment, leaving Bitcoin vulnerable to short-term volatility.

In addition to the drop in open interest, another key on-chain metric, the “Hot Supply,” has seen a significant decline. This metric tracks Bitcoin holdings that are aged one week or less, and it has dropped from 5.9% to 2.8% of the circulating supply over the past three months. This drop signals that fewer newly acquired Bitcoin are being traded, leading to a reduction in the supply of liquid Bitcoin on the market.

Exchange inflows have also dropped significantly, falling by 54% from 58,600 BTC per day to 26,900 BTC. This suggests weaker demand, as fewer coins are being moved to exchanges for trading. Lower exchange inflows may reduce sell-side pressure, but the decrease in trading volume could indicate overall market stagnation.

As of now, Bitcoin is trading around $86,225, trying to maintain support above the $85,000 level. Market commentators, including the well-known “Unknown Trader,” have pointed out that Bitcoin’s ability to close above the $85,000 level is crucial for maintaining upward momentum. The trader also noted that Bitcoin has closed above its 200-day moving average, historically a bullish signal. If Bitcoin can hold above $85,000, a move toward resistance at $90,500–$92,441 may be possible. However, there is also the potential for a rejection at these levels and a retest of the $85,000 support.

On a more positive note, CryptoQuant analyst Woominkyu highlighted a potential accumulation phase among U.S. institutional investors. He pointed to a bullish crossover of the 30-day EMA and the 100-day EMA of the Coinbase Premium Index, which has historically preceded price surges. This suggests that institutional investors may be increasing their Bitcoin holdings, potentially providing support for the ongoing bull market rather than signaling its end.

In conclusion, while Bitcoin is facing downward pressure from declining open interest and other on-chain metrics, there are still positive signals suggesting that institutional accumulation could drive the next phase of growth. Traders should closely monitor Bitcoin’s ability to maintain support above key levels to assess whether the bullish momentum will continue or if further consolidation is in store.