What does it mean for Bitcoin to be in a “bottoming phase”?

BTC Price “Bottoming Phase” Ends: 5 Key Insights for Bitcoin This Week

Bitcoin’s multi-month “bottoming phase” appears to be ending, with price action, on-chain data, and macro conditions all hinting at a new directional move. For traders, long-term holders, and web3 builders, this week’s signals around BTC are especially important for understanding where we are in the broader cycle.

Below are five key insights to watch as Bitcoin exits its bottoming structure and potentially sets up for the next major trend.

1. BTC Price Structure: From Accumulation to Expansion

After spending weeks in a tight range, Bitcoin is breaking out of a classic bottoming pattern visible on both daily and weekly charts.

Key technical signals

• Higher lows on the daily: Price has consistently defended support, suggesting sustained spot demand.
• Break above range resistance: BTC is challenging the upper band of its consolidation zone, often a precursor to trend expansion.
• Volatility compression → expansion: Low realized volatility typically precedes sharp directional moves.

For swing traders, the key question is whether this breakout holds with volume. For long-term Bitcoin holders, the structure supports the thesis that the cycle’s “capitulation and despair” phase is likely behind us.

2. On-Chain Data: Capitulation Looks Complete

On-chain indicators suggest that the worst of the sell-side pressure has already been absorbed, marking the end of the bottoming phase.

2.1 Long-Term Holder (LTH) Behavior

Long-term holders historically drive macro Bitcoin cycles.

• LTH supply near all-time highs: Coins held 155+ days are mostly dormant, signaling conviction.
• Low LTH spending: Minimal distribution into the recent price weakness, a typical pattern after bear markets.
• Realized price vs. spot price: Spot trading above the aggregate cost basis of long-term holders is a sign of improving health.

2.2 Short-Term Holder (STH) Reset

Short-term holders tend to get flushed out during bottoming phases.

• STH realized losses have normalized.
• Forced liquidations and panic selling have declined.
• New STH cohorts are entering near the bottom range, historically favorable entry zones.

These on-chain patterns, combined with reduced leverage and cleaner derivatives markets, indicate a healthier foundation for any upcoming BTC rally.

3. ETF Flows and Institutional Liquidity: The New Macro Driver

The introduction and maturation of spot Bitcoin ETFs in major markets have fundamentally changed BTC’s market structure.

3.1 Spot BTC ETFs: Sustained Net Inflows

Spot ETF flows are now one of the most important signals in Bitcoin price analysis:

• Consistent net inflows after the initial launch volatility.
• Growing assets under management (AUM) in leading funds.
• Increasing use of BTC ETFs as a macro hedge or “digital gold” allocation.

3.2 What to Watch This Week

• Daily ETF inflow/outflow data.
• Premium/discount on major funds.
• Correlation between ETF volume spikes and BTC spot moves.

If ETF demand remains resilient even during pullbacks, it supports a thesis that Bitcoin’s bottom is not only in, but that a more structurally supported uptrend is forming.

4. Macro Environment: Fed, Liquidity, and Risk-On Sentiment

Bitcoin’s bottoming phase has coincided with a shift in macro conditions. The interplay between BTC and traditional markets is crucial.

4.1 Interest Rates and Liquidity

By 2025, markets are focused on:

• The trajectory of Federal Reserve rate cuts or pauses.
• Global liquidity conditions, particularly in the U.S., EU, and Asia.
• The behavior of the U.S. dollar index (DXY) relative to risk assets.

Historically:

• Falling or stable rates + improving liquidity are bullish for BTC.
• Strong dollar + risk-off sentiment can pressure Bitcoin, even in structurally bullish cycles.

4.2 BTC as “Macro Asset”

Bitcoin continues to evolve from a purely speculative crypto asset into a recognized macro asset:

• Increasing mention in institutional macro reports.
• Growing correlation/decoupling cycles with equities and gold.
• Use as a hedge against monetary debasement and geopolitical risk.

For crypto-native participants, tracking macro calendars (CPI, FOMC, jobs data) is now as important as tracking on-chain data.

5. Implications for Traders, Builders, and Web3 Ecosystems

If Bitcoin’s bottoming phase is indeed ending, the ripple effects go far beyond BTC/USD charts.

5.1 For Traders and Investors

Focus on these tactical points:

1. Support and resistance mapping
• Identify the former range high as key support.
• Watch weekly closes for confirmation of a new trend.

2. Risk management
• Avoid over-leverage; volatility could spike.
• Use defined invalidation levels instead of anchoring to narratives.

3. Time horizon alignment
• Swing traders: trade the breakout/failed breakout.
• Long-term holders: zoom out to cycle structure rather than daily noise.

5.2 For Builders and Web3 Projects

A constructive Bitcoin cycle typically:

• Increases liquidity across altcoins and DeFi.
• Drives user onboarding into exchanges, wallets, and L2s.
• Boosts attention to infrastructure (scaling, security, UX).

Key strategic moves this week and beyond:

• Optimize onboarding funnels for new users entering via Bitcoin narratives.
• Map how BTC flows influence your protocol’s liquidity and fee generation.
• Position messaging around “Bitcoin and web3” rather than “BTC vs. web3,” especially for projects leveraging Bitcoin L2s, Runes, ordinals, or cross-chain infrastructure.

Conclusion: From Bottoming to Building the Next Leg

The evidence across price action, on-chain metrics, ETF flows, and macro conditions suggests that Bitcoin’s bottoming phase is largely complete. That doesn’t guarantee a straight-line move up, but it does indicate that the market has likely absorbed the worst of the previous downtrend.

For anyone involved in crypto and blockchain:

• Traders should be prepared for higher volatility and directional moves.
• Long-term holders can lean on cycle and on-chain confirmation.
• Builders and web3 teams should anticipate renewed attention, liquidity, and user growth centered around Bitcoin.

As this week unfolds, the crucial question is not just “Will BTC go up?” but “How will this emerging trend reshape capital flows, innovation, and adoption across the broader crypto and web3 ecosystem?”