• Bitcoin recovers from $80K to $88K, calming traders after last week’s panic.
• Retail sentiment turns sharply bearish while whale holdings keep shrinking.
• Data signals only a short-lived bounce unless institutional demand returns.

Bitcoin has clawed its way back to $88K after last week’s brief slip toward $80K. The rebound has added some calm to a market that watched fear rise across social platforms.

Many traders are now questioning whether the recent low was the best buy window of this cycle, or if more pain is still ahead.

Fresh data from Santiment shows how sharply optimism fell during the recent decline. The ratio of bullish to bearish comments collapsed as traders began declaring that the entire market had entered a bear phase.

Retail commentary mirrored previous cycle bottoms where hope had nearly vanished. History shows that sentiment extremes often precede sharp reversals, but the question is whether this moment qualifies.

Funding rates add another clue. Heavy short build-ups often trigger quick rallies once liquidations start, as seen after the October 6 all-time high when crowded shorts fueled a late-October rebound.

Current funding levels aren’t showing that same pressure. Bearish positioning is still elevated but well below the extremes that marked October’s temporary bottom.

Also Read: Bitcoin Price Outlook: $125K Target Unlikely for 2025 Rally

Bitcoin MVRV Ratios Signal Traders Still Deep in Losses

The short and long-term MVRV ratios in Bitcoin remain negative, and this means that most traders are in the red.

In the situation where the MVRV goes negative, it means there’s no need to sell, and this can sustain a small short-term bounce. However, the bigger picture isn’t pretty.

The number of Bitcoin addresses created has reduced from 3.37 million in mid-December 2023 to 2.21 million at present. The number of active addresses has also reduced, from 963,900 to 729,200.

The reason could be less use of Bitcoin, and this, according to analysts, is unhealthy when the markets are struggling to instill confidence.

Whale Wallet Activity Signals Ongoing Weakness

The largest warning sign comes from wallet activity. The Holders with 10-10,000 BTC, who are normally associated with funds, trading companies, and long-term whales, are still reducing their aggregate supply.

These wallets heavily accumulated from early September to early October, contributing to the Bitcoin peak on the 6th of October. The figures in their wallets flatlined on the 8th and have fallen for the past six weeks.

On the other hand, smaller traders with below 0.1 BTC are aggressively buying the dips. Such a scenario hardly ever forms the bottom. Large investors have always led the major bulls since 2020, and hence, their absence still keeps the rally in a fragile position.

Also Read:BlackRock Expands With New Bitcoin ETF in Australia: Can it Spark a Rebound?