Bitcoin turns oversold as ETF inflows drop and spot selling grows, with traders bracing for a fragile market and slower recovery ahead.

Bitcoin is struggling. Oversold readings are flashing, ETF demand is fading, and selling on spot markets is picking up. Traders are pulling back while liquidity thins out. The market feels heavier than it has in weeks, and price momentum keeps slipping. Any bounce may have to fight through this cooling phase first.

Bitcoin Spot Market Turns Defensive

Data from Glassnode showed Bitcoin’s RSI dropping from 47.4 to 35.8, sliding into oversold territory. Spot CVD fell to negative $220 million, nearly doubling from the previous week’s level. Volume also dipped from $8.4 billion to $7.5 billion, a sign that participation is drying up.

The weaker spot flow matches what traders are seeing on the ground. Sellers are pushing harder, and buyers are holding back. Price action near the $114,000 level reflects a market testing how far it can fall before demand reappears.

Futures activity cooled as open interest dropped from $45.6 billion to $44.9 billion. Funding for long positions slid 33 percent to $3.1 million. At the same time, perpetual CVD hit negative $1.8 billion, showing that forced selling is still active.

In the options market, open interest contracted 8.4 percent to $39.8 billion. Traders also paid up for downside protection, pushing 25 Delta Skew to 5.51. This shift shows a clear tilt toward hedging over speculative bets on a quick recovery.

Bitcoin ETF Flows Retreat While On-Chain Data Softens

CryptoRank reported the first net ETF outflow in 15 weeks, followed by another week of weakness. ETF inflows fell nearly 25 percent to $269.4 million, while trading volume inched up 9.9 percent to $19.8 billion. Institutions are engaging, but without conviction.]

First Crypto ETF Outflow in 15 Weeks

Last week marked the first net outflow from crypto ETFs in 15 weeks. This week is also showing continued outflows, reinforcing the “buy the rumor, sell the news” pattern as the long-anticipated crypto legislation was finally signed into law. pic.twitter.com/2xDt6Yyz5K

— CryptoRank.io (@CryptoRank_io) August 5, 2025

On-chain metrics paint the same picture. Transfer volume slipped 13.9 percent, and fees dropped 14.4 percent, signaling reduced activity. Meanwhile, the percent of Bitcoin supply in profit eased to 93.6 percent, and NUPL declined to 8.6, suggesting less realized profitability.

Market Stuck Between Oversold and Fragile

This cooling phase is a reset. The euphoria that drove Bitcoin higher has faded, replaced by caution and lighter positioning. Glassnode’s report noted that oversold conditions may offer room for a bounce, but the market’s structure remains vulnerable if ETF demand fails to return.

For now, traders are watching key support levels closely. Without renewed inflows or stronger spot buying, Bitcoin could stay in this fragile range longer than many expect.