In the ever-evolving cryptocurrency market, recent off-chain indicators are sending mixed signals that traders should closely monitor for potential trading opportunities. According to glassnode, the Relative Strength Index (RSI) has dropped sharply to 51.7 as of July 29, 2025, indicating fading momentum in the market. This decline in RSI suggests that the bullish drive may be weakening, potentially setting the stage for increased volatility or a short-term pullback in major cryptocurrencies like BTC and ETH. Traders often view an RSI around 50 as a neutral zone, but this sharp drop could signal caution, especially if it approaches oversold levels below 30, which might present buying opportunities for those eyeing dip-buying strategies.

Mixed Signals in Spot and Futures Markets

Adding to the complexity, spot Cumulative Volume Delta (CVD) has shown improvement, hinting at underlying dip-buying activity among investors. This metric, which tracks the net difference between buying and selling volume on spot exchanges, suggests that despite the fading momentum, there is still accumulation happening at lower price points. For instance, if Bitcoin's price dips below key support levels around $60,000, this improved CVD could indicate smart money entering the market, potentially leading to a rebound. Meanwhile, futures Open Interest (OI) remains elevated at $45.6 billion, reflecting sustained interest from leveraged traders. High OI levels often correlate with heightened volatility, as seen in past market cycles where elevated futures positions preceded sharp price swings. Traders should watch for any sudden liquidations if prices move against the majority positions, which could amplify downward pressure or spark a short squeeze in upward movements.

Impact of ETF Flows on Market Sentiment

Another critical factor is the significant drop in ETF flows, which have plummeted by 80%, signaling caution among traditional finance (TradFi) participants. This reduction in inflows to Bitcoin and Ethereum ETFs points to waning institutional enthusiasm, possibly due to macroeconomic uncertainties or regulatory concerns. In trading terms, lower ETF flows can lead to reduced liquidity in the spot market, making it harder for large trades to execute without impacting prices. For crypto traders, this could mean focusing on on-chain metrics like active addresses or transaction volumes to gauge retail participation, which might counterbalance the TradFi pullback. Historically, periods of low ETF inflows have coincided with consolidation phases, where prices trade sideways before breaking out, offering range-bound trading setups with defined support at $55,000 for BTC and resistance near $65,000.

From a broader trading perspective, these mixed indicators underscore the importance of a multi-faceted approach. Combining technical analysis with on-chain data can help identify entry and exit points more effectively. For example, if the RSI continues to decline while spot CVD strengthens, it might signal a bullish divergence, encouraging long positions with stop-losses below recent lows. Conversely, the high futures OI warns of potential over-leveraging risks, advising traders to manage position sizes carefully. In the absence of strong directional cues, scalping strategies on lower timeframes or hedging with options could mitigate risks. Overall, the current setup suggests a market in flux, where patient traders monitoring these indicators could capitalize on emerging trends, potentially driven by upcoming economic data releases or geopolitical events that influence crypto sentiment.

To optimize trading decisions, consider correlating these off-chain signals with broader market dynamics. For instance, if global stock markets show resilience, it might bolster crypto recovery, given the historical positive correlation between BTC and indices like the S&P 500. Institutional flows, despite the ETF slowdown, remain a key watchpoint, as any resurgence could propel prices higher. Traders are encouraged to use tools like moving averages or Bollinger Bands alongside these indicators for confirmation. In summary, while momentum fades and TradFi exercises caution, the improved spot buying hints at underlying strength, making this a pivotal moment for strategic positioning in the cryptocurrency landscape.