Key Takeaways
Bitcoin shows cooling speculation with falling Funding Rates and NVM ratio, yet strong exchange outflows and rising address activity suggest investor confidence. $118K liquidation zone remains key for next breakout.
Bitcoin’s [BTC] derivatives market has experienced a noticeable sentiment shift, with Perp Funding Rates falling below 0.1% after peaking at euphoric levels.
This drop indicates a cooling in aggressive leveraged long positions and growing trader caution.
Despite Bitcoin hovering near $117,000, this funding contraction suggests a reduction in speculative activity on exchanges like Binance, OKX, and Bybit.
Therefore, the lower Funding Rates may point to a market breather rather than sustained bullish conviction, especially as derivative traders hedge against increased volatility.
NVM ratio shows weakening network valuation despite price growth
While price action has remained strong, the Network Value to Metcalfe (NVM) ratio dropped sharply by 18.07%, at press time, reflecting weakening value relative to user activity.
The NVM reading was at 1.95. This suggested that the market cap was growing faster than active engagement. This divergence implies Bitcoin may be overvalued from a network fundamentals perspective.
However, new and active address counts have both risen over the past week, which could provide a longer-term buffer against valuation concerns.
Still, this imbalance highlights the growing disconnect between speculative price moves and on-chain adoption metrics.
Investors continue pulling Bitcoin off exchanges
Bitcoin is seeing steady spot exchange outflows, with $113.32 million withdrawn on the 8th of August alone.
This ongoing negative netflow trend signals that investors prefer holding rather than trading, even as prices consolidate.
The consistent red bars on exchange charts show more BTC leaving than entering, a pattern typically associated with accumulation phases.
Such behavior reflects growing confidence in Bitcoin’s long-term value, despite a pullback in speculative indicators like funding rates.
Overall, the gap between price action and netflows suggests strong underlying demand and bullish sentiment among long-term holders.
Will liquidation zones around $118K ignite or reject the rally?
The latest Binance liquidation heatmap reveals dense liquidation layers between $116,000 and $118,000, creating a critical resistance band for BTC.
These clusters, highlighted in bright yellow and green, mark areas where aggressive leverage positions are most likely to be liquidated.
As price consolidates just below this level, any sharp move could trigger a cascade of liquidations, either fueling upside momentum or prompting a swift rejection.
Therefore, how BTC navigates this liquidation wall could determine whether bulls reclaim higher ground or face short-term exhaustion.
Can Bitcoin sustain its current levels?
Bitcoin’s recent pullback in Funding Rates and NVM ratio highlights cooling speculation and network overvaluation.
However, sustained exchange outflows and rising address activity signal long-term investor confidence.
The $116K–$118K liquidation zone remains a critical hurdle. If bulls can overcome this cluster, it may trigger renewed momentum.
Otherwise, a rejection could reinforce short-term caution. Overall, underlying metrics suggest resilience, but a breakout is needed to validate the next leg higher.
