Bitcoin has experienced a much calmer start to July compared to the highly volatile conditions seen in late May and throughout June. However, lower volatility and fewer liquidations do not necessarily signal the beginning of a sustained recovery. According to analysts, several on-chain indicators continue to suggest that the current rebound remains fragile and that buyers still lack strong conviction.
Bitcoin Demand Remains Too Weak to Absorb New Supply
One of the most closely watched on-chain metrics is Apparent Demand, which compares newly mined Bitcoin with the amount of BTC that has remained inactive for more than one year. The indicator helps determine whether long-term holders are accumulating enough Bitcoin to absorb the new supply entering circulation.
According to crypto analyst Darkfost, the metric has remained negative throughout 2026. Although conditions have improved slightly over the past three weeks, Apparent Demand currently stands at approximately -75,000 BTC, a significant improvement from this year's low of -275,000 BTC, but still a clear indication that demand remains insufficient.
Spot Bitcoin ETFs have also failed to materially change the picture. Since July 2, spot ETFs have recorded three consecutive trading days of net inflows. However, looking back to mid-May, the overall trend remains overwhelmingly negative, with only three trading days posting positive net inflows during that period.
Leverage Has Eased, but Risks Remain
The derivatives market tells a similar story.
Analyst Novaque Research noted that the June sell-off significantly reduced market leverage. However, speculative excess has not been fully eliminated, preventing the market from establishing healthy long-term accumulation conditions.
The Estimated Leverage Ratio, which measures open futures interest relative to exchange reserves, currently stands at 0.241, slightly above its 100-day moving average.
Meanwhile, funding rates have returned to positive territory after spending several months predominantly below zero. Together, these two indicators suggest that leverage is gradually increasing again, even though spot demand remains relatively weak.
Any Rally Could Still Be Temporary
The combination of weak demand and rising leverage continues to make analysts cautious.
Even if Bitcoin stages a short-term recovery, it may represent nothing more than a temporary bounce rather than the beginning of a sustainable bull market supported by stronger fundamentals.
June's sharp correction also demonstrated the dangers of aggressively trying to catch the market bottom. Many traders opened leveraged long positions expecting a reversal, only to see those positions liquidated as prices continued to decline.
Long-Term Holders Continue Accumulating, but Macro Risks Persist
On-chain data suggest that long-term Bitcoin holders continue accumulating BTC, providing one of the few encouraging signals in the current market.
However, analysts also warn that broader macroeconomic conditions still leave room for another wave of capitulation. If economic conditions deteriorate further or financial markets remain under pressure, the final phase of the sell-off may not yet be complete.
Overall, current data suggest that while Bitcoin is showing early signs of stabilization, demand still remains too weak to outpace newly issued supply. Until that imbalance improves significantly, analysts believe any price recovery is likely to remain highly vulnerable.
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The information and opinions presented in this article are for informational and educational purposes only and should not be considered financial or investment advice. Nothing on this page constitutes a recommendation to buy or sell any assets. Cryptocurrency investments are inherently risky and may result in financial loss. Always do your own research before making any investment decisions.