Bitcoin remained under pressure this week, dropping 7.5% to around 61,700 dollars as macroeconomic conditions continued to weigh on risk assets. A stronger U.S. dollar, with the index closing at 100.01 after a 0.8% weekly gain, alongside a steady 10-year Treasury yield at 4.53%, reinforced an environment that has historically coincided with weakness in digital assets.
Valuation signals deep discount but no rebound
The AVIV Index, which compares spot prices with adjusted market averages, showed a Z-score of -1.06 after dipping to -1.09, placing Bitcoin in a deep discount zone relative to its four-year average. Despite this apparent undervaluation, prices have failed to stage a meaningful rebound, suggesting that selling pressure remains firmly in place.
Losses among short-term market participants have intensified, with more than 95% now underwater. The STH-MVRV indicator shows their gains-to-cost ratio has only marginally recovered to 0.83 from 0.81, pointing to average unrealized losses of roughly 17% to 19%.
The share of profitable short-term holdings has improved slightly from 0.6% to 3.3%, but remains far below the four-year average of 55%. This indicates that most recent traders are still holding losing positions, leaving the market vulnerable to additional shocks.
Capitulation signals build without full flush
The realized profit-and-loss ratio for short-term holders (STH-SOPR) reached a Z-score low of -1.86, approaching the historical capitulation threshold of -2. Daily realized losses climbed to 1.35 billion dollars, while persistent stop-loss activity continued without the full-scale capitulation typically seen at cycle bottoms.
At the same time, demand from large buyers in the United States has weakened. The price spread between domestic and offshore spot markets has stayed in discount territory throughout Bitcoin’s decline toward 60,000 dollars, reflecting subdued interest.
Corporate treasury buying has also slowed after stronger accumulation in April and May. Daily net inflows, which previously exceeded 500 million dollars, have fallen close to zero since early June, removing a key source of support.
Leverage wiped out as volatility surges
As Bitcoin fell below 70,000 dollars, a dense cluster of leveraged long positions between 64,000 and 70,000 dollars was liquidated. This triggered a cascade of forced selling that briefly pushed prices under 60,000 dollars, effectively clearing most speculative leverage in that range.
Volatility spiked following the breakdown from a multi-month trading band. One-week implied volatility rose above 60% before easing toward 50%, while one-month and longer-term measures climbed to 45% and around 44%, respectively.
Realized volatility also increased, moving from 27% to 39%, but implied levels remain higher. This indicates that traders expect continued large price swings in the near term.
Downside protection demand dominates options market
Demand for downside protection has risen sharply. The 25-delta volatility skew increased across all maturities, with the one-month measure jumping from 11% to 24% and shorter-term contracts reaching as high as 30%, signaling strong interest in put options.
Options positioning shows the largest negative gamma exposure concentrated near 65,000 dollars. Around one-third of total options volume over the past week involved put contracts, rising to 35.9% in the last day. Meanwhile, positive gamma levels are clustered between 76,000 and 82,000 dollars.
Outlook remains fragile without new demand
Overall, market conditions resemble a late-stage corrective phase. Leverage has largely been flushed out, valuations have moved into deep discount territory, and defensive positioning dominates derivatives markets. However, the steady inflow of spot demand needed to establish a durable bottom has yet to appear.
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