Bitcoin Shows Signs of Recovery With 6% Weekly Gain, But Risks Remain

Bitcoin posted mixed signals this week as improving buying activity in spot and futures markets, along with steady ETF inflows, contrasted with lingering fear among traders. Order flow data showed a $925 million net buying day on July 15, absorbing the pullback that followed inflation data without triggering a larger price decline. Spot Bitcoin ETFs also recorded back-to-back positive days, adding $107.7 million on July 15 after $181 million the day before.

Funding rates dropped sharply from a range of 0.10% to 0.22% down to 0.048%, while open interest fell more than 3% from its recent peak. Despite this unwinding of leverage, Bitcoin’s price dipped only slightly, suggesting traders were adjusting positions near resistance rather than fleeing the market.

Sentiment Still Lags Behind Price Action

Even with Bitcoin bouncing off recent lows, the Fear and Greed Index remains in “Fear” territory, a divergence that has historically signaled a more sustainable setup than rallies built on optimism. However, renewed conflict involving Iran, rising oil prices above $85, and growing expectations of a Federal Reserve rate hike by September continue to pose risks. Analysts caution that while recent buying is encouraging, it is not yet enough to confirm a full trend reversal.