Signal of the week: Average daily long liquidations fell to $7.5 million, the lowest level since July 2024. The sharp decline suggests that excessive leverage has been largely flushed from the market, reducing forced selling and potentially giving bulls more room to build a recovery.
Bitcoin finally broke out its recent range and reclaimed the 200-week SMA, but the underlying picture remains mixed. ETF inflows had their strongest week since April, while long liquidations fell to multi-year lows. At the same time, long-term holders and smaller wallets both reduced their Bitcoin holdings, while realized losses increased again. The market is therefore becoming less leveraged, but conviction among some holder groups appears to be weakening.
About the Bitcoin Impact Index
The Bitcoin Impact Index measures which groups of Bitcoin holders are under financial stress, how severe that stress is, and whether it’s severe enough to shake confidence in the market’s direction. It combines on-chain holder behaviour, ETF and derivatives activity, and exchange-level liquidity flows into a single weekly score between 0 and 100. Unlike sentiment indicators, it deliberately excludes social media and volume data to focus on what participants are doing rather than what they are saying.
Score bands:
- Normal Rotation (0–24) — routine profit-taking, no structural shift
- Elevated Repositioning (25–49) — specific groups shifting positions, pressure uneven across the market
- High Impact (50–74) — broad stress across multiple holder groups and institutional flows simultaneously
- Critical Impact (75–100) — full capitulation: LTH losses, large ETF outflows, major liquidations, and heavy exchange inflows at once
Week 32 (August 3–9): BII 34.3 — Elevated Repositioning
Positive signals: leverage is being flushed from the market
Bitcoin’s derivatives market continues to show signs of cooling. Average daily long liquidations fell to just $7.5 million, the lowest level since July 2024. Short liquidations were also relatively low last week at around $19 million per day.&
The decline is partly a reflection of Bitcoin’s relatively low volatility and range-bound price action. Still, the lack of major liquidation events means the market is facing less forced selling pressure than during previous periods of stress. This doesn’t necessarily mean that Bitcoin is ready for a sustained recovery, but it could give bulls more room to push the price higher.
ETF demand also picked up sharply. Spot Bitcoin ETFs recorded around $853.5 million in net inflows, their strongest weekly inflow since April. After several weeks of relatively modest flows, the increase suggests that investors could be positioning for a further price recovery as Bitcoin attempts to break out of its recent range.
Negative signals: long-term holders and retail investors are distributing
Despite stronger ETF demand, long-term holders are moving in the opposite direction.
Long-term holder supply fell by nearly 100,000 BTC over the past week, marking its largest weekly decline since late 2025. The move was accompanied by higher realized losses, suggesting that long-term holders continue to distribute more into weakness rather than waiting for higher prices.
Smaller holders also showed unusually strong activity. Wallets holding less than 100 BTC reduced their combined balance by more than 42,000 BTC, worth roughly $2.6 billion. Most of this came from wallets holding less than 1 BTC, or “shrimps.” This move could be partly influenced by the recent Coldcard situation, which raised concerns among self-custody users.
This is notable because smaller holders have generally tended to accumulate during weaker market periods and distribute during bull markets. Their recent distribution was the largest since October 2024 and means that retail investors have moved much of the Bitcoin they accumulated during 2026. If this trend continues, it may suggest that retail holders might be preparing to sell their BTC, or might be losing conviction in the near-time Bitcoin recovery.
Mixed signals: selling pressure is rising, but the market is not in capitulation
Realized losses increased again this week, reaching around $731 million on a 7-day average basis. Realized loss per unit of liquidity also jumped to 56.4%, showing that a larger share of market activity is now taking place at a loss.
At the same time, short-term holders moved back into a slightly profitable position as their realized P/L ratio turned positive. This suggests that some recent buyers are no longer selling at a loss, while the pressure is increasingly coming from long-term holders.
Bitcoin’s Binary Coin Days Destroyed (BCDD) also reached its highest level since November 2025, pointing to increased activity among older coins. Higher activity from long-term holders does not automatically mean selling, but combined with their nearly 100,000 BTC reduction in supply, it strengthens the case that some older investors are preparing for a move lower.
What could happen next?
Bitcoin has reclaimed the 200-week SMA and broken above the descending channel on the four-hour chart, with the move supported by higher trading volume. This is a positive development and gives bulls a stronger technical setup.&
However, four-hour and lower timeframes are beginning to show potential bearish divergences, which could make it difficult for Bitcoin to immediately reach the next major target at $68,000.
If Bitcoin can hold above the 200-week SMA and continue higher, a successful break of $68,000 would strengthen the case for a broader recovery. It would also show that the market can absorb selling from investors who have been waiting for an opportunity to exit.
However, if the 200-week SMA fails to hold again, Bitcoin could return to the recent range. In that case, $62,000 and $60,000 would become the main support levels to watch.
The web content provided by CEX.IO is for educational purposes only. The information and tools provided neither are, nor should be construed as, an offer, or a solicitation of an offer, or a recommendation, to buy, sell or hold any digital asset or to open a particular account or engage in any specific investment strategy. Digital asset markets are highly volatile and can lead to loss of funds.
The availability of the products, features, and services on the CEX.IO platform is subject to jurisdictional limitations. To understand what products and services are available in your region, please see our list of supported countries and territories. This page includes additional links to information about individual products, and their accessibility.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments