Bitcoin Rebounds After Sharp Correction, On-Chain Data Suggests Positive Outlook
Bitcoin is recovering following one of it’s most important corrections this year. On-chain data indicates that this crypto crash might have set the stage for a healthier rebound.
During Friday’s market-wide downturn, Bitcoin’s open interest dropped by $12 billion, falling from $47 billion too $35 billion. This sharp decline marked one of the steepest leverage resets in recent history. The price of BTC dipped as low as $102,000, well below its recent peak of $126,000. However, buyers stepped in over the weekend, pushing BTC back up to around $115,117, a 3% increase on the day.
Key on-chain metrics show stabilizing sentiment and rising liquidity. Funding rates, which turned negative during the sell-off, have now stabilized at modestly positive levels. This suggests that extreme bearish bets are unwinding, and sentiment is normalizing.
The Bitcoin Estimated Leverage Ratio (ELR) also fell sharply, indicating that excessive leverage has been flushed out.This reduces the risk of further liquidations and signals broad deleveraging across the derivatives markets.
Additionally, the Stablecoin Supply Ratio (SSR) has declined to its lowest level as April. This means more stablecoin liquidity is available, potentially ready to flow into Bitcoin once confidence returns.
Historically, large-scale deleveraging events have often preceded major price recoveries.This suggests the recent reset could be a positive signal for the months ahead.
Digital asset investment products saw $3.17 billion in inflows last week, with BTC leading at $2.67 billion. This demonstrates continued investor confidence despite volatility.
Trading activity also hit record levels, with weekly volumes on digital asset ETPs reaching $53 billion.This indicates that market participants remain confident in Bitcoin and the broader market.
combined with high liquidity, these factors may support the current rebound and set the stage for a more sustained recovery in the weeks ahead.
