Matrixport analyzed that Bitcoin is attempting a countertrend rebound after capitulation, but is still in a large-scale bear market reset phase.
"Bitcoin is rebounding after a significant capitulation sell-off," Matrixport said in a daily chart analysis released today. "This decline has led to the liquidation of vulnerable positions, triggering passive selling pressure and cascading forced liquidations in the derivatives markets."
Matrixport emphasized that while "there is still room for upside from a technical perspective in the short term," "whether the rebound can go further depends on whether new capital inflows continue, rather than simply short-selling covering and mechanical hedging funds."
Analysis suggests that the current rebound is primarily driven by short covering and mechanical hedging activities, and could be unsustainable without substantial new buying demand.
"As we've previously noted, Bitcoin is still in a larger bear market reset phase," Matrixport explained. "While rapid gains are not uncommon during this phase, they are often difficult to sustain."
A bear market reset refers to the process by which the market liquidates excessive leverage and speculative positions, laying the foundation for a new uptrend. While a sharp rebound may occur during this period, Matrixport's analysis suggests that sustained growth is unlikely without structural improvements in demand.
Matrixport noted that on-chain data continues to demonstrate the vulnerability of the current market environment. "On-chain data continues to confirm the current environment remains fragile," the firm analyzed, "Demand momentum is weakening, and structural accumulation is limited."
On-chain data is an indicator that tracks actual transactions and asset movements occurring on the blockchain, and is used to understand the actual supply and demand situation in the market. The fact that this data is currently sending bearish signals indicates a lack of real buying demand.
Matrixport warned that increased hedging activity in the derivatives market is further exacerbating volatility. "At the same time, increased hedging activity in the options market is further amplifying volatility," it explained.
In particular, he warned that "when spot demand is weak, prices are likely to show a gap-like decline, and the impact of derivatives on Bitcoin prices also increases accordingly."
This means that if there is no substantial buying demand in the spot market, hedging activities and liquidation in the derivatives market can have an excessive impact on prices, leading to sharp volatility.
Capitulation refers to a phenomenon in which market participants, unable to bear further losses, panic and sell off large amounts of assets. It typically occurs in the final stages of a bear market and can signal a subsequent rebound.
However, Matrixport emphasized that a rebound after a sell-off does not automatically indicate a trend reversal and must be accompanied by a real improvement in demand.
In its previous weekly report, Matrixport analyzed that "Bitcoin has reached a key downside target zone after a sharp decline." However, it assessed that the market remains "between two fires," with directionality unclear.
Joohoon Choi joohoon@blockstreet.co.kr
"Bitcoin is rebounding after a significant capitulation sell-off," Matrixport said in a daily chart analysis released today. "This decline has led to the liquidation of vulnerable positions, triggering passive selling pressure and cascading forced liquidations in the derivatives markets."
Matrixport emphasized that while "there is still room for upside from a technical perspective in the short term," "whether the rebound can go further depends on whether new capital inflows continue, rather than simply short-selling covering and mechanical hedging funds."
Analysis suggests that the current rebound is primarily driven by short covering and mechanical hedging activities, and could be unsustainable without substantial new buying demand.
"As we've previously noted, Bitcoin is still in a larger bear market reset phase," Matrixport explained. "While rapid gains are not uncommon during this phase, they are often difficult to sustain."
A bear market reset refers to the process by which the market liquidates excessive leverage and speculative positions, laying the foundation for a new uptrend. While a sharp rebound may occur during this period, Matrixport's analysis suggests that sustained growth is unlikely without structural improvements in demand.
Matrixport noted that on-chain data continues to demonstrate the vulnerability of the current market environment. "On-chain data continues to confirm the current environment remains fragile," the firm analyzed, "Demand momentum is weakening, and structural accumulation is limited."
On-chain data is an indicator that tracks actual transactions and asset movements occurring on the blockchain, and is used to understand the actual supply and demand situation in the market. The fact that this data is currently sending bearish signals indicates a lack of real buying demand.
Matrixport warned that increased hedging activity in the derivatives market is further exacerbating volatility. "At the same time, increased hedging activity in the options market is further amplifying volatility," it explained.
In particular, he warned that "when spot demand is weak, prices are likely to show a gap-like decline, and the impact of derivatives on Bitcoin prices also increases accordingly."
This means that if there is no substantial buying demand in the spot market, hedging activities and liquidation in the derivatives market can have an excessive impact on prices, leading to sharp volatility.
Capitulation refers to a phenomenon in which market participants, unable to bear further losses, panic and sell off large amounts of assets. It typically occurs in the final stages of a bear market and can signal a subsequent rebound.
However, Matrixport emphasized that a rebound after a sell-off does not automatically indicate a trend reversal and must be accompanied by a real improvement in demand.
In its previous weekly report, Matrixport analyzed that "Bitcoin has reached a key downside target zone after a sharp decline." However, it assessed that the market remains "between two fires," with directionality unclear.
Joohoon Choi joohoon@blockstreet.co.kr
