Bitcoin Stalls as Stocks and Gold Rally

Original author: Glassnode

AididiaoJP, Foresight News

Global markets keep hitting new highs, yet Bitcoin remains unmoved. This report focuses on this "stillness": a theft occurring while the market is nearly asleep, bottom signals accumulating through boredom rather than panic, and an options market priced as if it will never move—yet emotionally hypersensitive to the slightest breeze.

• Stocks and gold surged, crude oil significantly repriced lower, and Bitcoin barely moved.
• 594 BTC were stolen, and the volume of dormant coins stirred is 200 times the stolen amount; the price is unaffected by either.
• The bottom signal is assembling through boredom rather than surrender, but it has not yet reached the true bottom of previous bear markets.
• Institutional buying from the past two years is still reversing.
• The option is priced assuming little movement in either direction, yet sentiment flips with every small market swing.
• This type of depth squeeze has almost always resulted in an upward breakout historically; however, the demand engine has yet to activate with this formation.

Placing the major markets on the same axis with zero as the baseline makes this week’s movement instantly clear. Both major stock indices hit new records, gold rose in tandem, and crude oil opened sharply lower on Sunday due to news of downgrade-related tensions, erasing its supply risk premium. Bitcoin, the only asset trading over the weekend, ended slightly below the level left by last week’s report, trailing the S&P 500 by more than four percentage points. Everything except the main focus of this report moved. What follows is an attempt to explain why.

The stock market’s sentiment hung on the FOMC. On July 29, the Fed held rates steady, and the initial market reaction was a sell-off: the S&P closed at its lowest level since this summer, and stock market panic reached its peak. But reassessment took just one trading day. The speed at which fear faded was a level seen only ten times since 2009. Four days after the decision, the index closed at 7,737, surpassing the record high since June; on the same day, the Euro Stoxx 50 also set a new record. The key lies in this sequence: the market first sold off “patience,” slept on it, then spent four days concluding that “patience” was actually good news.

Standing pat is being read as good news because the underlying data has turned. The leading economic index reversed a year-long decline within two months, while consumer confidence posted its steepest two-month gain since early 2024. The central bank standing still, while forward-looking data improves, removes the risk of further tightening and lets growth take the lead—markets have priced this in precisely. Bitcoin has priced none of this in. Whether its stagnation reflects weakness or anesthesia, future data will tell.

At 1:00 AM on Friday, July 31, the market underwent an unannounced stress test. Within 25 minutes, attackers exploited a five-year-old vulnerability in Coldcard hardware wallets’ key generation, siphoning approximately 594 BTC—valued at around $38 million—from roughly 500 self-custodied wallets. The theft ended almost as soon as it began. But the on-chain reactions it triggered lasted for days and served as the clearest natural experiment on holder behavior in this cycle.

The “supply resurrected after more than one year” (the amount of coins moved again after at least one year) surged to approximately 119,000 BTC over the following three days—200 times the stolen amount. Holders across the ecosystem moved coins out of potentially compromised seeds. Compared to three weeks of normal activity, this was an isolated spike. Only about one-tenth of it ultimately reached exchanges; the number of new addresses returned to baseline within three days, and the supply held in wallets owned for less than a month has increased by 40% since then and continues to rise. This represents a migration to new cold wallets, not a sell-off or liquidation.

On the spot market, there was almost no registration of this event. The largest movement of legacy coins in this cycle generated neither measurable selling pressure nor a discernible price reaction. A market that remains indifferent to the robbery of core self-custody holders shows neither active buying nor active selling—exactly the state described by the next cycle indicators.

Bottom signal during boredom

Bullish signals for Bitcoin typically arrive through pain: a capitulation sell-off drives the percentage of profitable supply to extremes while volatility surges. This time, we’ve reached the same area through boredom. Profit compression is in place, but it was worn down by months of gradual decline, arriving with volatility at floor levels rather than ceiling levels. The destination is familiar, but the path here has no precedent among previous bottoms.

Standing at the door, not yet inside the room.

The "Seller Exhaustion Constant" (profitable supply ratio multiplied by realized volatility) clarifies this point. Its 30-day average is at the low point of this cycle and has entered the range previously seen at every prior bottom, yet it remains about one-third above the floor reached in each previous bear market. The indicator is at the door, but hasn’t entered the room: if past cycles are any guide, the final drop has yet to come.

The track is running in reverse.

On the demand side, it’s a story of matching. The institutional demand drivers from the last bull market—U.S. spot ETFs and corporate treasuries—have been returning coins over the past quarter: in June alone, funds saw net outflows of approximately 65,800 BTC, the worst single month on record, compared to the best single month at the end of 2024, which saw net inflows of over 218,000 BTC. Corporate treasury purchases continue, but at a scale far too small to offset the fund outflows. Regardless of how the bottom forms, it must emerge in the context of the structural buying demand that has been absent over the past two years—until that buying pressure returns.

From risk aversion to defense

Our Market Compass summarizes the current state: after being pinned in the risk-averse zone for nearly three weeks, the composite indicator has moved into the defensive zone, with all inputs largely aligned. Defensiveness means the market has stopped deteriorating, but lacks momentum. Half of the bottoming checklist has been checked off; the remaining items all await one missing element: a catalyst event.

No one is paying for direction.

Split the options surface into its two wings: the much-discussed "fear premium" in Bitcoin options is actually stranger than it seems. Implied volatility on the upside has hit its lowest level in history, near 23%, while implied volatility on the downside remains ordinary—the last time it was cheaper was in August 2023. This asymmetry isn’t due to bidding up put options, but rather the disappearance of demand for call options. No one is paying for upside moves, and not much is being paid for downside moves either.

Emotions are hard to control

Meanwhile, sentiment is restless. Our fastest-moving position indicator—the 1-week 25 Delta skew—plummeted by more than eight points in a single day, while spot prices barely moved. Two weeks ago, when the July high was reached, the same vacuum opened and was filled again within four days. Short-term fear is being priced in through mere percentage-point swings, while implied volatility levels remain pinned to the floor. This whipping is almost entirely confined to options: perpetual funding rates are locked in at long-term norms, so leverage isn’t the amplifier—sentiment is. The market has bought a week of calm but continues paying a premium for six months of risk.

History has opinions.

History has opinions on this compression. When 1-month implied volatility is squeezed to similar depths, the breakout is almost always upward—and this benchmark remains the most constructive data point for this period. But there’s a caveat: most past squeezes resolved while the demand engine was idling in the background, whereas this one formed as the trend was reversing and the final decline had yet to complete.

A concise summary of the current regime: a market that is compressed, underpositioned, and left behind by global risk appetite, with bottom conditions assembling but not yet complete. Compression ensures that the eventual move will appear massive relative to existing positions, while the at-the-money options curve guarantees late participation. Confirmation of improvement will come through a return of net inflows into ETFs or volatility expanding upward from the squeeze. When sellers’ positioning reaches the levels last seen at the end of each prior bear market, the classic bottom template is complete. “Priced to zero, overreacted” is not a stable state.