• Bitcoin may be forming a market bottom as macro conditions improved investor sentiment.
• The top crypto outperformed US and European equities following the release of softer June inflation data.
• Bitcoin ETF flows have improved, although spot demand remains modest.

Bitcoin's (BTC) recent recovery may mark the early stages of a bottoming process as macroeconomic data continues to boost investor confidence, according to a Glassnode report on Wednesday.

Bitcoin recovery gains stronger footing amid positive macro data

Bitcoin outperformed both US and European equities following the US CPI inflation report on Tuesday, recovering strongly after weeks of trading sideways near recent lows. The move suggests selling pressure is becoming exhausted while buyers are increasingly waiting for positive macro catalysts.

"That sensitivity is the tell. A market this eager to rally on one inflation print is a market where sellers are spent and buyers are waiting for a reason," Glassnode wrote.

That statement came before the Producer Price Index (PPI) print on Wednesday showed easing wholesale inflation. Further strengthening the outlook for the top crypto.

The report highlights that Bitcoin continues to trade above the average onchain cost basis of all investors, while remaining below the short-term holder (STH) cost basis near $69,000.

Glassnode also noted that long-term holders have largely stopped realizing profits as recent outflows increasingly sold at a loss, reflecting signs of a late-stage bear market.

Meanwhile, buyers appear to have absorbed much of the selling pressure from June's decline. Glassnode's Accumulation Trend Score showed broad buying activity across both small and large wallet cohorts as Bitcoin traded near its recent lows. The accumulation has since moderated as prices stabilized.

Spot ETF flows show improvement despite weak spot demand

Institutional flows have also reflected signs of improvement. US spot Bitcoin ETF redemptions slowed considerably from June's heavy outflows, suggesting that selling pressure is beginning to stabilize.

Bitcoin funds netted $181 million in inflows on Tuesday, partially offsetting the day before's $424 million in outflows. Although this reflects a minor recovery, the unwinding has yet to be supported by strong buying, suggesting that institutions are still exercising caution.

"Until inflows return and hold, this remains a market where institutions have stopped fleeing but not started buying," Glassnode wrote.

In derivatives markets, traders have steadily shifted from bearish positioning. The options put-to-call ratio has fallen to its lowest level of the year, indicating reduced demand for downside protection.

Perpetual futures funding rates have also remained slightly positive, suggesting long positioning has yet to become crowded.

Glassnode cautioned that although bearish bets are being removed, the recovery lacks strong spot market demand.

"What the unwind has not produced is actual buying. Futures and options traders repositioning is not the same as money entering the spot market, and that absence is the clearest caveat on the whole recovery," the report stated.

Bitcoin is trading at $64,660, down 0.4% over the past 24 hours as of this writing.