Analyst Flags On-Chain Signals Pointing to a Bitcoin Market Bottom

Highlights:

• Bitcoin’s Sharpe Ratio rebound shows risk conditions have improved sharply.
• Short-term supply share has dropped below 7%, pointing to fading retail pressure.
• Derivative exchange flows show rising conviction among active Bitcoin traders.

Bitcoin is showing several signs that the recent downtrend may have reached its floor. According to market expert Ali Martinez via an X post on April 23, on-chain data shows easing downside pressure, reduced retail activity, and stronger positioning from larger market participants. Together, these shifts suggest Bitcoin may be moving out of a heavy correction and into an early recovery phase.

Risk Appetite Starts to Return After Recent Stress

One of the clearest changes has appeared in Bitcoin’s Sharpe Ratio, which measures return against risk. Earlier, the metric dropped to negative 43, showing that volatility had badly damaged risk-adjusted returns. Now, the ratio has rebounded to about 20.35, which points to a major shift in market conditions.

This implies that the market has begun to absorb the worst of the recent turbulence. As a result, traders are enjoying a healthier risk-to-potential-reward balance. The price action is yet to be confirmed, but the recovery in this measure indicates that the panic has subsided and the market structure has begun to stabilize.

Bitcoin Retail Interest Stays Low as Supply Changes Hands

Another key signal comes from the Percentage Realized Cap tied to coins bought within the past month. This reading measures the degree to which Bitcoin network value is concentrated among the new buyers compared to long-term buyers. That share is now below 7%, which has had significant significance historically at the bottoms of previous cycles.

When this percentage falls this far, it usually shows that retail participation has thinned out sharply. In turn, fewer short-term holders remain available to sell into weakness. This shift leaves a larger share of network value with investors who have shown greater patience and conviction through volatility.

Historically, markets often form durable bottoms when speculative interest dries up, and long-term holders dominate supply. Therefore, the latest drop below 7% adds weight to the view that seller exhaustion has already taken hold. Quiet conditions in the broader market also support that reading, especially while short-term activity remains subdued.

Exchange Flow Trends Now Point to Rising Market Conviction

A third signal comes from the Inter-exchange Flow Pulse, which tracks Bitcoin moving between spot and derivative exchanges. Current data shows more Bitcoin heading toward derivative platforms. This pattern often reflects rising confidence because traders typically move BTC there to use as collateral for long exposure.

This flow suggests that professional participants are preparing for upside rather than bracing for another heavy breakdown. Moreover, this behavior often appears when market conviction starts to return before a broader rally becomes obvious to retail traders.

The MVRV Pricing Bands add a clear roadmap for the next phase. Bitcoin has reclaimed the negative 0.5 MVRV band near $73,700, which now acts as the key pivot for the current structure. As long as that level holds, the mean reversion target sits near $96,000, giving the market a defined path higher.

At the time of this writing, BTC was trading around $77,820, down by nearly 1% over the last 24 hours. Despite the latest pullback, BTC is up by 4% over the last 7 days. Moreover, its market cap and trading volume have declined to $1.55 trillion and $44 billion, respectively.