Bitcoin’s $87,000 rally just flipped from short squeeze to long risk

Bitcoin’s newly confirmed bull market is already showing signs that the rally powering it may be losing momentum.

Last week, the top digital asset climbed to an eight-month high near $87,400 after reclaiming a long-term technical threshold that CryptoQuant says marked the start of a fresh bullish phase. Its Bitcoin Bull Score Index has since risen to 90 out of 100, a reading consistent with broadly favorable market conditions.

In fact, data from Look Into Bitcoin shows that “Bitcoin sentiment has hit its greediest reading since July 2025.”

But beneath that headline strength, the balance between new demand and existing holders looking to cash out is beginning to shift.

The change does not yet amount to a breakdown in the broader trend. Bitcoin remains above several long-term support levels and has retained much of its recent advance. Still, weakening demand and heavier profit-taking raise the prospect that the market could face its first meaningful test since the bullish breakout.

The clearest strain is emerging across the sources of demand that supported Bitcoin’s advance.

CryptoQuant estimates apparent spot demand contracted by about 170,000 BTC over the past 30 days, suggesting cash-market buying has failed to keep pace with the rally.

US exchange-traded fund flows point in the same direction. CryptoSlate previously reported that ETF daily inflows declined by 97% over the past week, falling from around $1 billion to just $31 million by Sept. 28.

Speculative demand has cooled even faster.

CryptoQuant estimates growth in futures demand has fallen to about 16,000 BTC from 164,000 BTC on Sept. 14, removing another source of incremental demand as Bitcoin retreats from $87,400.

The slowdown is becoming more consequential because existing holders are sitting on increasingly large gains.

Short-term traders’ unrealized profit margin has climbed to 33%, its highest since December 2024, expanding the pool of gains available to be realized if investors choose to reduce exposure.

Some have already done so.

Bitcoin holders realized profits on 25,700 BTC on Sept. 22, the largest single-day total of 2026, according to CryptoQuant, as investors used the rally to lock in gains near the top of the recent range.

That leaves Bitcoin confronting a widening imbalance: the pace of fresh buying has weakened while the amount of profitable supply available for sale has increased.

The combination does not establish a cycle top. But another sustained leg higher would likely require spot demand to strengthen enough to absorb profit-taking from holders who accumulated Bitcoin at lower prices.

Bitcoin’s market structure has become increasingly dependent on derivatives even as overall leverage retreats.

CryptoQuant data shows the spot-to-futures volume ratio on Binance at about 0.12, meaning roughly 90% of combined trading activity is in futures. For every dollar traded in the spot market, roughly $8 to $9 is changing hands through derivatives.