Bitcoin rises nearly 5%, but three on-chain signals are warning: Is the rebound a fleeting moment?

Bitcoin has experienced a technical correction after reaching a stage low, rebounding nearly 5% from the lows at the end of January and briefly reaching $76,980. Short-term candlestick charts show that the price movement is highly similar to previous short-term rebound paths, seemingly with room to continue. However, on-chain data and market structure indicators have cast doubt on this rebound, with multiple signals indicating that bullish momentum remains insufficient.

From the 4-hour chart, Bitcoin formed a bullish divergence between January 31 and February 3: the price made a new low while the RSI simultaneously rose. This combination typically indicates weakening selling pressure and an increased likelihood of a short-term rebound. A similar pattern appeared in mid-January, when the price surged to $84,640 before falling back. This wave of movement follows the same technical rhythm, explaining why the price was able to recover quickly.

FalconX senior crypto market strategist Martin Gaspar believes that macro capital flows also provide short-term support. He points out that rotation within the precious metals sector may prompt some funds to reallocate into digital assets, especially after silver retreated. This structural shift could marginally benefit Bitcoin.

However, without sustained buying, technical patterns often fail to develop into a trend. The first warning signal comes from UTXO Realized Price Distribution (URPD). Data shows that approximately 0.46% of Bitcoin supply is clustered around $76,990, indicating many holders are at breakeven. When the price reaches this zone, selling pressure tends to increase significantly, which is why the rebound was blocked at $76,980. The previous January rebound near $84,640 also encountered a similar “supply wall,” corresponding to a dense zone of selling pressure.

The second signal comes from changes in exchange reserves. After Bitcoin hit a low of about 2.718 million coins in mid-January, it rebounded to 2.752 million within three weeks, an increase of roughly 34,000 coins. This suggests more funds are flowing back into exchanges, reflecting holders’ preference to cash out rather than hold long-term.

The third signal is the weakness of the SOPR indicator. Currently, it remains below 1, hovering around 0.97, indicating many investors are selling at a loss. Historically, when exchange reserves increase and SOPR remains weak, it often signals market sentiment leaning toward defense, and rebounds tend to be “deleveraging windows.”

From a price structure perspective, Bitcoin needs to break through three key levels to regain upward momentum: $76,980, $79,360, and $84,640. The last level corresponds to the largest URPD supply dense zone. Only by stabilizing above this zone can the rebound have a sustainable trend extension.

Additionally, the Smart Money Index remains below its signal line, indicating institutions have not increased their holdings following the rebound. While emotional catalysts could alter short-term expectations, if the price falls again below $72,920, a new downside could open.