Compared to the wild price movements of early June, Bitcoin ($BTC) faced liquidation due to declining volatility in early July. However, this doesn’t necessarily mean it’s a month of recovery.
There is no getting around the fact that the demand for Bitcoin has decreased dramatically. Spot ETF flows have been positive for the past three business days. July 2ndHowever, it has been overwhelmingly negative since mid-May, with net inflows lasting only three days.
Evidence Continues to Show Lack of Conviction among Bitcoin Buyers
The apparent demand metric, calculated as the difference between new issuance and the supply of Bitcoin that has been inactive for more than a year, helps track whether the accumulation trend of long-term holders is sufficient to absorb the new supply created by the network.
Cryptocurrency analyst Dirkforst observed that this indicator remained negative throughout 2026. Although there was some slight improvement over the past three weeks, it was only marginal. -75,000 $BTCcompared to this year’s low. -275,000 $BTC.
Another analyst, Novaque Research, used the estimated leverage ratio and positive funding rate to argue that leverage had been significantly reset. However, speculative excess is not completely reduced to allow for a clean accumulation trend.
Across all exchanges, the estimated leverage ratio, calculated as the ratio of open interest to exchange reserves, has reached the following levels: 0.241slightly above the 100-day moving average.
Funding interest rates also turned positive after being in mostly negative territory for several months. Together, these two signals indicate that while spot price trends remain weak, they are becoming more influential in the market.
Weak apparent demand suggests that buying readiness is fragile even if prices bounce back. The June selloff resulted in an overly prolonged liquidation as market participants who tried to grab the market bottom got burned.
AMBCrypto reported that although long-term holders are accumulating, macroeconomic developments may mean the final capitulation stage has not yet occurred.
Final summary
- Apparent demand for Bitcoin has improved slightly but will remain negative throughout 2026 as well.
- Rising speculative and funding rates indicated market participants were willing to go long, but without spot demand, a rebound was vulnerable.
