Bitcoin's Tug-of-War Between $60,000 and $70,000: Volatility Weakens, Bottoming Out Still Requires Time

Original Author: Glassnode

Original Compilation: AididiaoJP, Foresight News

Bitcoin remains within the $60,000 to $70,000 range. Early signs of accumulation are emerging in the spot market, while the derivatives market has completed a reset. Volatility has cooled, and positioning structure has become more balanced. However, due to a lack of clear catalysts, the market lacks the confidence needed for a sustained breakout.

Summary

• Bitcoin remains stuck in a wide range between $60,000 and $70,000. URPD data shows a dense cluster of supply overhead between $80,000 and $126,000. Digesting this supply overhang may require a more significant price discount or a longer period of redistribution.
• The total supply in loss is approaching 8.4 million BTC, resembling the market structure seen in Q2 2022. At that time, the market needed to redistribute approximately 3 million BTC to reclaim the cycle mid-line.
• Long-Term Holder Realized Loss has been climbing since November 2025, now reaching around $200 million per day, confirming active capitulation. A cooling of this metric below $25 million per day would be a key threshold for market bottoming.
• The Coinbase Spot Cumulative Volume Delta has turned slightly positive, indicating spot buyers are beginning to absorb selling pressure. However, the current level of demand remains far below what is typically seen during the formation of durable lows.
• Treasury flows have become more concentrated: Marathon has distributed roughly 15,000 BTC, while Strategy remains the only entity consistently making large-scale purchases.
• Directional premium in the perpetual futures market has compressed to near-neutral levels, slightly below zero, reflecting a reset of bullish leverage and cooling speculative enthusiasm.
• Current perpetual positioning is far from momentum-driven; long exposure is being unwound, and short interest is re-emerging. This makes the futures market more balanced overall but also more cautious.
• Implied volatility continues to soften across the term structure, indicating the options market is pricing in a calmer near-term environment and reduced demand for volatility exposure.
• Skew metrics are beginning to tilt downwards again, showing a return of protective positioning, though levels remain well below those typically associated with strong hedging demand.
• Gamma positioning has shifted back to being supportive of the market, reducing convexity effects on price declines and indicating a stabilization of market maker short-term positioning following the recent negative gamma phase.

On-Chain Insights

The Scale of Unrealized Loss Supply

As price consolidates in the $60,000-$70,000 range, this report will step back from short-term price dynamics to assess the structural forces shaping the current market environment. As noted in recent reports, one of the most persistent headwinds to momentum is the large volume of supply purchased above $80,000, which is now in an unrealized loss.

This cohort has endured a bearish environment for over six months, facing a binary behavioral choice: either sell into any rally to mitigate further losses, or capitulate psychologically as price retraces deeper.

The URPD chart illustrates this clearly, showing a dense cluster of supply distributed between $80,000 and $126,000, firmly overhead of the market price. Resolving this supply overhang will likely require either a significant price discount to attract new buyers or a prolonged period where these coins are transferred from loss-realizing holders to more resolute new holders.

Supply in Loss

To quantify the overhead supply overhang, we can use the 'Total Supply in Loss' metric. It counts the number of circulating bitcoins whose last move price was higher than the current spot price. Smoothed with a 30-day simple moving average to remove short-term noise, this metric currently stands at approximately 8.4 million BTC, meaning between 8 and 9 million coins have been consistently in loss over the past month.

The scale of this value, coupled with spot price trading near the current cycle's mid-line, suggests similarities to the market structure observed in Q2 2022. Historically, resolving a supply overhang of this magnitude requires a significant redistribution of coins from loss-holding sellers to new buyers entering at lower prices. The precedent from the 2022 bear market is instructive. Typically, the market only decisively reclaimed the cycle mid-line after the total supply in loss compressed from above 8 million BTC to around 5 million BTC. This implies that roughly 3 million coins changed hands before conditions normalized.

Tracking the Ongoing Redistribution

After identifying the scale of loss supply needing redistribution, the next step is monitoring the pace of this process. The 'Long-Term Holder Realized Loss' metric measures the total value of losses realized by investors who held for more than six months and are now selling below their initial cost basis. This metric directly captures the active redistribution of the aforementioned overhead supply.

The 30-day moving average of this metric has been steadily rising since November 2025 and is now at elevated levels around $200 million per day. This confirms that Long-Term Holders are increasingly capitulating to the current market. While this wave of loss realization is a necessary and constructive step in the bear market clearing process, it alone is insufficient to constitute a market reversal. A significant cooling of this metric below $25 million per day would represent a more convincing signal of seller exhaustion and has historically been a prerequisite for market bottoming before sustainable bull runs begin.

Off-Chain Insights

Coinbase Spot Demand Returns

The spot market is showing initial signs of stabilization. The 30-day moving average of the Coinbase Spot Volume Delta has turned slightly positive in the latest data. This follows an extended period of negative values throughout January and early February, reflecting persistent distribution as selling pressure dominated.

The recent shift suggests that as price stabilizes, buyers are beginning to absorb available supply and provide support. However, the magnitude of the positive delta remains modest, indicating current demand is tentative rather than conviction-driven.

Historically, stronger market recoveries require sustained positive spot flows, whereas fleeting buying episodes often fail to produce follow-through. For now, the recent uptick is constructive, but a more durable recovery likely requires an expansion in buying pressure.

Treasury Flows Grow More Complex

The broad-based nature of treasury flows has weakened significantly in recent months. The latest data reveals a more uneven and selective pattern of activity. In the earlier cycle, corporate accumulation was supported by a wider set of allocators. Recent flows, however, suggest buying support is becoming increasingly concentrated.

Most notably, Marathon has sold approximately 15,000 BTC, one of the clearest examples of recent corporate treasury reduction rather than increased exposure. In contrast, Strategy appears to remain the only consistent structural buyer; the firm continues to make regular purchases even as participation from other companies has become more sporadic.

This shift points to a significant change in market structure. Corporate demand is no longer a broad-based corporate accumulation trend; it now appears narrower and more reliant on a single dominant player. The net result is that corporate buying, while still present, has a less broad base and is therefore a less reliable source of structural support compared to earlier cycle phases.

Perpetual Premium Reset

Directional premium in the perpetual futures market continues to compress, with the 30-day sum now near neutral and slightly below zero. This marks a clear cooling from the bullish conditions that previously supported rallies.

This shift suggests bullish speculative positions are being unwound, while short interest is beginning to re-emerge. The current structure does not reflect strong market conviction but points to a more cautious and balanced perpetual futures landscape.

Historically, resets in directional premium often accompany consolidation or trend exhaustion, as leverage is repriced following an extended move. In this sense, the recent decline in premium indicates speculative appetite has faded, leaving the perpetual market thoroughly reset with diminished leverage.

Volatility Expectations Are Easing

Following the reset in options market positioning, implied volatility is the first area showing change. Bitcoin's volatility term structure has shifted lower overall compared to last week, led by the front end. 1-week at-the-money implied volatility is now 51%, with 3-month at 49%. Other tenors are tightly packed in between, with 6-month at 49.8%, pointing to a significantly compressed term structure.

This reflects a market dialing back expectations for near-term large moves, despite ongoing macro uncertainty. Longer-dated volatility is relatively better supported, suggesting uncertainty hasn't disappeared but is being pushed further out in time. In the near term, pricing is shifting towards a more convergent volatility regime as the market lacks immediate catalysts and demand for optionality has faded.

Downside Protection Begins to Rebuild

As volatility expectations soften, skew metrics reveal a shift in positioning towards a more cautious stance. Higher 25-delta skew (calculated as put minus call) indicates the market is pricing a greater premium for downside protection. Last week, 1-week skew hit a monthly high of 22.7% before retracing, reflecting its sensitivity to immediate price action. In contrast, longer-dated skew continues to trend higher and remains elevated: 1-month at 17.4% and 6-month at 13.2%.

This divergence across tenors is telling. While near-term price stabilization has eased short-dated hedging demand slightly, protective options further out continue to see strong buying interest. The market isn't pricing aggressive moves, but the entire term structure consistently assigns more weight to downside risk. This points to a persistent defensive bias rather than just a temporary reaction to short-term market gyrations.

Short-Term Gamma Below Market

This more defensive positioning structure becomes more relevant when mapped to market makers' gamma exposure. Negative gamma is now building below current price levels, extending from $68,000 down into the $50,000s. This implies the market is buying puts below the spot price and does not expect the recent bounce to last long, forcing market makers to take the other side of these trades.

Under this setup, market makers would be forced to sell into weakness, amplifying downward volatility. With overall market structure appearing fragile as liquidity remains thin post the March 27th expiry, a move into this zone could exacerbate downside momentum through hedging flows. This could trigger accelerated selling, turning what might have been a gradual move into a sharper repricing, potentially retesting the $60,000 level—the low from the February 5th sell-off.

Calm Realized Volatility Masks Fragility

Adding to the instability of the current setup is the persistent premium of implied volatility over realized volatility. On the front end, 1-week realized volatility is 38%, while 1-week implied is 49%, a gap of 11 percentage points. This gap has persisted for over three weeks, indicating options have been consistently priced above actual market movement.

At first glance, this reflects a seemingly stable market, as realized volatility remains contained. However, the persistent premium suggests market participants are pricing in risk despite a lack of actual price directionality, pointing to an environment of low market confidence.

With volatility priced above realized and gamma negative, it would take relatively little selling pressure for price moves to become amplified. This is because the market would adjust rapidly from a compressed pricing base with limited positioning capacity to absorb flows.

Conclusion

Bitcoin remains locked in a wide range between $60,000 and $70,000. The market shows initial signs of stabilization but lacks sufficient momentum for a decisive breakout in either direction. On-chain conditions still reflect a market in repair: supply in loss is elevated, and Long-Term Holder capitulation has not fully cooled. Meanwhile, spot demand is beginning to show signs of improvement, suggesting sellers no longer have complete control.

Off-chain, the picture is similarly balanced. Corporate treasury demand has narrowed significantly, perpetual leverage has reset, implied volatility has softened, and market maker positioning has stabilized. These signals collectively point to an environment no longer under obvious pressure but still searching for stronger market conviction.

For now, Bitcoin appears to be undergoing a phase of redistribution rather than stepping into a clear trend. Until spot demand expands more significantly and the overhead supply overhang begins to clear, range-bound trading is likely to remain the dominant characteristic.