Key highlights:
- Bitcoin traders are piling into leveraged long positions despite weak spot demand
- Glassnode says whale longs have hit an unprecedented streak, while futures open interest remains elevated
- Bitcoin needs to reclaim $68,700 to confirm that demand is returning, while a price slump below $58,500 could expose crowded longs to losse
Bitcoin traders are betting on a recovery even as spot-market demand remains too weak to support the move, according to Glassnode. The on-chain analytics firm says leverage has built up while Bitcoin trades in a narrow range, creating a setup where a failed breakout can trigger a price slump.
Traders are betting on a recovery, says Glassnode
Glassnode’s latest Week On-chain report, titled “Trigger Happy,” points to a growing disconnect between derivatives positioning and the underlying Bitcoin market. The report notes that whale traders on Hyperliquid have maintained a net-long position every day since mid-March, marking an unprecedented streak in the platform’s one-year history.
Per Glassnode, the positioning intensified as Bitcoin approached the top of its recent range, with the whale book reaching its largest net-long exposure in mid-July. Glassnode analysts revealed that nothing in the spot or capital-flow data currently validates the bullish conviction, leaving traders exposed if the range breaks lower.
Meanwhile, futures positioning also shows elevated risk. Open interest has climbed above the equivalent of a full day’s futures trading volume, approaching the record ratio seen last September.
The lack of demand is most visible in the spot market, with Glassnode noting that Bitcoin’s spot exchange volume has fallen to its lowest level since 2019. However, Bitcoin ETF inflows have only turned positive recently after months of heavy selling, remaining far below previous accumulation waves.
This leaves Bitcoin caught between two important cost-basis levels. The cryptocurrency is trading above the $63,000 Median Realized Price but below the $68,700 Short-Term Holder Cost Basis, with the latter representing the average entry price for recent buyers who remain underwater.
Source: Glassnode
Glassnode opined that a sustained move above the $68,700 price point will put recent buyers back into profit and provide a stronger signal that the market is recovering. Conversely, losing the $63,000 median level could expose Bitcoin to a deeper decline, with Glassnode’s analyst pointing to $58,500 as the key lower range level.
Crowded longs could amplify the next move
Glassnode also warned that the market’s order book has weakened. Resting bids that supported Bitcoin’s summer trading range have fallen by nearly one-third since early July, leaving less liquidity underneath the market.
Analysts at Glassnode state that it creates a dangerous combination of heavy leverage, thin spot volume and weaker bids. If Bitcoin falls, long positions could face liquidation at a time when there is insufficient market depth to absorb the selling, accelerating the decline.
Glassnode’s broader assessment is that sellers are showing signs of exhaustion, but buyers have yet to provide the demand to confirm a bottom. Early in the week, Bitcoin whales accumulated 46,420 BTC while a portion of retail traders capitulated as the asset shrugged off a wave of bad news.
“Sellers are tiring, and buyers are absent, yet leverage has already pulled the trigger on a recovery the data does not yet support,” said Glassnode.
