Ronchaiwan
February 20, 2025, 17:13
The momentum in the Bitcoin (BTC) market will decrease as capital inflows weaken across digital assets. Ethereum, Solana, and Memecoins are seeing key fixes, reflecting changes in investors’ sentiment.
According to GlassNode Insights, Bitcoin (BTC) is currently trading within the $93,000 to $97,000 range, making it navigating periods of decline in momentum. Transactions based on this range show a broader cooling trend across the digital asset market, weakening capital inflows in the derivatives market and reducing activity.
The market momentum is a breather
In late January 2025, Bitcoin attempted to meet at an all-time high (ATH) rally, but was unable to maintain momentum, leading to a phase of contraction. This slump has affected major cryptocurrencies, experiencing Ethereum (ETH), Solana (SOL) and deeper corrections. In particular, Bitcoin price momentum fell from an increase of 48.4% in November 2024 to a decrease of 5.9% in February 2025.
Evaluation of performance so far
Since early 2023, Bitcoin has offered a benchmark return profile, trading about 3.4 times higher than in April 2023. In contrast, Ethereum is struggling with returns of 1.3 to 2.0 times compared to its April 2023 value. Solana has dropped to about 7.6 times the correction that was set, despite its 2023 value peaking at 11.8 times in early January 2025.
Capital flow drives the market
Solana consistently attracts higher relative capital inflows and supports price increases. However, in recent weeks, capital inflows have been declining across all digital assets. Ethereum and Memecoin are inverted into negative capital flows, with Ethereum facing a net runoff of 0.1% and memokine index, seeing a sharper runoff of 5.9%, indicating a decrease in speculative appetite.
The weaknesses of the futures market
As spot market momentum declines, permanent futures markets have diminished open interest across key assets. Bitcoin’s public interest fell by 11.1%, Ethereum fell by 23.8%, Solana fell by 6.2%, and Memokine fell by 52.1%. This reduction indicates a retreat in leveraged speculation, with Memecoin experiencing the biggest decline due to its highly speculative nature.
Funding rates indicate bearish feelings
Permanent futures funding rates have fallen, reflecting a shift towards bearish sentiment. Bitcoin and Ethereum maintain a slightly positive funding rate, while Solana and Memecoin see their funding rates negative, indicating a bearish outlook and a decline in long speculative position .
ETF flow and market impact
Institutional interest in Bitcoin and Ethereum has slowed down, as seen in Spot ETF Flow. The Bitcoin ETF experienced a significant outflow last week, then rebounded into buy-side activities, highlighting institutional demand. In contrast, demand for Ethereum ETFs remains restrained, with net flow hovering near zero.
Bitcoin’s current trading range remains significant between $93K and $97,000, with a Short Term Holder (STH) cost base serving as a key pivot point of $92.5,000. This level is important as it determines whether or not a recent buyer will retain profit or loss status and may affect further market movements.
For more detailed insights, see the original GlassNode Insights analysis.
Image source: ShutterStock
