Reading on-chain data at the right time can give investors an early edge.
At the current stage of the cycle, timing matters more than ever. From a technical view, traders have wiped $10 billion+ from the market this week, dragging Bitcoin closer to $70k.
With major liquidity clusters sitting on both the upside and downside, the next move could trigger a significant liquidity sweep in either direction.
That said, several early indicators suggest bulls are gradually losing control. Bitcoin sentiment has dropped into extreme fear, a level that has historically signaled capitulation events.
At the same time, more than 45% of short-term holders (STHs) are now underwater, increasing the likelihood of panic selling as market participants begin to test their conviction.
Notably, the same trend is visible among U.S. investors.
According to CryptoQuant, Bitcoin’s Coinbase Premium Index (CPI) recently dropped to a more than three-month low of -0.17, highlighting weak demand from the U.S.-based participants.
This weakness also shows up in ETF flows, with Spot Bitcoin ETFs recording more than $1.4 billion in net outflows this week alone.
Taken together, these signals suggest that bears currently hold the advantage, leaving Bitcoin [$BTC] vulnerable to further downside.
As a result, the $70k support level looks increasingly difficult to defend, especially when factoring in another key market signal.
Bitcoin sees liquidity shift as stablecoin outflows surge
The timing of moves in a risk-off market rarely looks like coincidence.
With on-chain signals turning bearish, stablecoin outflows reflect classic flight-to-safety behavior. According to DeFiLlama data, more than $2 billion in stablecoins have exited the market, pointing to increased hedging activity from investors.
But these liquidity shifts go beyond just capital leaving Bitcoin.
Notably, stablecoin supply on Hyperliquid [$HYPE] has increased by over 8.25% over the same period, translating into $500 million+ in inflows. This move lines up with the $HYPE/$BTC ratio rising 10%+ this week, highlighting where liquidity is actually rotating.
The key takeaway? This trend may only just be starting.
As the analyst pointed out, over $8 billion in $USDC now sits on Hyperliquid, showing a large pool of stablecoin liquidity on the platform. Through its deal with Circle, this $USDC generates yield, with a portion expected to flow into buybacks.
Based on rough estimates, this could add around $700k+ per day in additional buyback pressure, on top of what’s already happening today. In essence, the possibility of $HYPE’s continued dominance over Bitcoin remains, with the $HYPE/$BTC ratio’s 63% Q2 rally potentially just the start.
As a result, Bitcoin’s next move increasingly leans toward bear control.
With on-chain signals turning bearish, liquidity exiting the market, stablecoins flowing into $HYPE, and the $HYPE/$BTC ratio expanding, Bitcoin’s plunge into extreme fear reflects rising downside pressure across the market.
Final Summary
- Bitcoin shows weakening momentum with extreme fear, outflows, and bearish signals pointing to more downside risk toward $70k.
- Liquidity is rotating into $HYPE, with stablecoin inflows and buyback support strengthening its relative outperformance versus Bitcoin.