Bitcoin’s Powerful Bullish Signal Emerges, Yet On-Chain Data Reveals Fragile Market Foundation

In late 2024, cryptocurrency traders identified what analysts describe as Bitcoin’s ‘most accurate’ bullish signal, historically preceding massive price rallies. However, comprehensive on-chain data simultaneously reveals persistent sell-side pressure and defensive market positioning, creating a complex landscape for BTC’s potential price reversal. This divergence between technical indicators and fundamental metrics presents a nuanced picture for investors navigating the volatile digital asset space.

Bitcoin’s Historical Bullish Signal Reappears

Analysts recently observed a significant technical development involving the Stochastic RSI of both the United States 10-Year Treasury Yield (US10Y) and China’s 10-Year Government Bond Yield (CN10Y) against Bitcoin’s weekly chart. This specific bullish cross has only occurred four previous times in Bitcoin’s history, according to analyst Coinvo Trading. Each previous instance preceded substantial price appreciation for the world’s leading cryptocurrency.

Notably, the last confirmed occurrence of this signal happened in October 2020. Subsequently, Bitcoin embarked on a historic rally, surging approximately 600% to reach its November 2021 all-time high near $69,000. The reappearance of this pattern in 2024 has naturally captured significant attention from technical analysts and long-term investors alike. This signal’s historical accuracy provides a compelling narrative for potential bullish momentum.

Additional Technical Perspectives on BTC Price Action

Beyond the bond yield cross, other analysts point to complementary indicators. Matthew Hyland highlights the performance of the U.S. Dollar Strength Index (DXY) as a potential catalyst. Historical data shows that Bitcoin has experienced significant rallies when the DXY declined below the 96 level, as witnessed in both 2017 and 2022. Monitoring this macroeconomic indicator remains crucial for understanding broader capital flow dynamics.

Furthermore, the current divergence between Bitcoin and gold presents an interesting market dynamic. While gold has recently achieved record highs above $5,000 per ounce, Bitcoin has remained relatively range-bound. Analysts from Swan Bitcoin suggest this divergence is not necessarily bearish for BTC. Historically, gold often moves first during periods of macroeconomic uncertainty, while Bitcoin may consolidate for extended periods before experiencing a sharp, volatile breakout to the upside.

On-Chain Data Reveals Underlying Market Weakness

Despite the promising technical signals, a deep dive into on-chain metrics paints a more cautious picture. The Bitcoin market currently exhibits signs of fragility, primarily driven by a noticeable absence of aggressive buyers. The spot Cumulative Volume Delta (CVD), a key indicator measuring the net difference between buying and selling trade volumes, has turned sharply negative.

Glassnode’s latest Weekly Market Impulse report details a steep decline in this metric, dropping to -$194.2 million from a positive $54.2 million the prior week. This dramatic flip suggests trader behavior has shifted meaningfully toward a risk-off stance. The data reflects fading confidence in near-term price continuation and confirms a clear shift toward sell-side dominance in the spot market.

Key On-Chain Warning Signs:

• Negative CVD: Indicates net selling pressure outweighing buying.
• ETF Flow Reversal: Spot Bitcoin ETF weekly flows flipped from a $1.6 billion inflow to a $1.7 billion outflow.
• Defensive Positioning: Rising hedging demand suggests institutional caution.

Institutional Demand Cools as Macro Pressures Mount

The reversal in spot Bitcoin ETF flows serves as a critical data point for institutional sentiment. After periods of sustained inflows, the shift to significant outflows suggests cooling institutional demand. This change applies additional near-term downside pressure on Bitcoin’s price. Glassnode analysts conclude that overall market conditions have turned more defensive.

Persistent sell-side pressure, combined with growing macroeconomic uncertainty surrounding U.S. fiscal policy and Federal Reserve actions, contributes to a fragile trading environment. Analysts warn that Bitcoin may face another prolonged consolidation phase, citing stiff overhead resistance and continued selling pressure from ETF products. The market must absorb this supply before establishing a firm foundation for the next leg up.

The Path Forward: Signal Versus Fundamentals

The current market setup presents a classic conflict between leading technical indicators and lagging on-chain fundamentals. The bullish bond yield cross acts as a forward-looking signal, historically anticipating major trend changes. Conversely, on-chain data like CVD and ETF flows reflect real-time market participant behavior, which currently remains cautious.

This divergence is not uncommon in transitional market phases. Bull markets often climb a ‘wall of worry,’ where positive price action emerges despite lingering skepticism and defensive positioning. The critical question for 2025 is whether the historical bullish signal will overpower the current fundamental headwinds. Market participants should monitor whether on-chain metrics begin to improve, confirming the technical breakout, or if the sell-side pressure delays the anticipated reversal.

Conclusion

Bitcoin’s market landscape in early 2025 is defined by a powerful contradiction. The emergence of a historically accurate Bitcoin price reversal signal offers a compelling bullish thesis, backed by precedent. However, the reality of fragile on-chain data, cooling institutional flows, and macroeconomic uncertainty cannot be ignored. A sustainable BTC price recovery likely requires a resolution of this tension, where buying pressure consistently overtakes selling and on-chain health improves. While the bullish signal provides hope, patience may be necessary as the market works through its current defensive posture and builds a stronger foundation for the next advance.

FAQs

Q1: What is the ‘most accurate’ bullish signal for Bitcoin?
The signal refers to a specific bullish cross involving the Stochastic RSI of the US 10-Year Treasury Yield and China’s 10-Year Government Bond Yield plotted against Bitcoin’s weekly price chart. It has occurred only four previous times, each preceding a major rally.

Q2: Why is on-chain data considered negative despite the bullish signal?
Metrics like the spot Cumulative Volume Delta (CVD) have turned sharply negative, indicating net selling pressure is dominating the market. Additionally, spot Bitcoin ETF flows have reversed from large inflows to significant outflows, showing cooling institutional demand.

Q3: How reliable is this bullish signal based on past performance?
Historically, it has been very reliable. The last occurrence in October 2020 preceded a 600% rally to Bitcoin’s all-time high in 2021. However, past performance does not guarantee future results, especially in different macroeconomic conditions.

Q4: What does the divergence between Bitcoin and gold indicate?
The divergence, where gold hits new highs while Bitcoin consolidates, is not necessarily bearish for BTC. Analysts note that gold often leads during uncertain times, while Bitcoin has historically experienced periods of sideways action before volatile breakouts.

Q5: What needs to happen for a sustained Bitcoin price recovery?
A sustained recovery likely requires an improvement in on-chain fundamentals, such as the CVD metric turning positive and ETF flows returning to net inflows. The market needs to absorb current sell-side pressure and see buyer conviction increase to confirm any technical breakout signaled by the bullish cross.