Sign of the week: Funding rates turned positive and hit the highest level since January. The last time this happened was before two weeks of increasing stress.
This week looks better than last, at least on paper. Liquidations all but disappeared and long-term holders returned to profitable territory. But the amount of losses realized by Bitcoin moved reached its highest level since the February sell-off, and NUPL continued to fall. This suggests that the stress indicator is low, but the underlying pain is not.
About the Bitcoin Impact Index
The Bitcoin Impact Index measures which groups of Bitcoin holders are under financial stress, how severe that stress is, and whether it is severe enough to shake confidence in the direction of the market. It combines on-chain holder behavior, ETF and derivatives activity, and exchange-level liquidity flows into a single weekly score between 0 and 100. Unlike sentiment indicators, it deliberately excludes social media and volume data to focus on what participants do rather than what they say.
Scoring bands:
- Normal rotation (0–24) — routine profit taking, without structural change
- Elevated Repositioning (25–49) — specific groups changing position, uneven pressure across the market
- High impact (50–74) — widespread tension between multiple groups of holders and institutional flows simultaneously
- Critical Hit (75–100) — total capitulation: LTH losses, large ETF outflows, major liquidations and strong currency inflows at the same time
Week 14 (March 29 – April 4): BII 42.5: High repositioning
The index fell 15 points compared to last week. This is a significant improvement, but the data tells a more complicated story.
Positive signs: The worst of the previous weeks unfolded quickly
The most dramatic change occurred in derivatives. Over the past month, leveraged traders have aggressively positioned themselves for further decline. Last week, the pressure released through forced position closures and outright liquidations collapsed to the lowest level since mid-February. With less forced selling pressure in the system, the immediate stress on prices eased.
Stablecoin inflows had a positive return of $179 million on a daily average, and Bitcoin arrival on stock exchanges fell to its lowest level since Decemberwhich means sellers are taking another step back.
Mixed signals: Long-term holders are at a crossroads
Long-term holders crossed the break-even line again, with LTH SOPR at exactly 1.0. This is a decision point. From here, long-term holders either sell at a profit again, which would be a true structural improvement, or fall back below breakeven under continued price pressure, which is what happened in previous weeks after a similar brief rally. This is the third time in 2026 that LTH SOPR approached or crossed 1.0 without holding it. Each previous attempt was followed by a deterioration and a decline in prices..
The positive turn in financing rates is the most ambiguous signal of the week. On the surface it appears that sentiment is improving. But the last time the funding was positive, two weeks later saw the sharpest escalation of stress of the year.
Negative signs: Bitcoin-driven pain is near its worst
Despite the index value improvement, realized loss density (how much loss is concentrated per unit of Bitcoin actually moved) reached its highest reading since the February stress peak. That means that holders who sell do so at huge losses, even when sales volume has fallen. Fewer people are selling, but those who are selling are suffering more. That is not the signature of a market that has overcome its stress. It is the signature of holders who are forced to sell at increasingly bad prices.
Both shark and whale wallets reduced their Bitcoin balances this week, a quiet change after weeks of accumulation. NUPL declined for the second week in a row, meaning overall market profitability continued to erode even as the price remained relatively stable.
What could happen next?
The index’s improvement this week was primarily driven by derivatives liquidation rather than a true on-chain recovery. The key signals to watch out for are whether the LTH SOPR can stay above 1.0 and take advantage of it rather than pull back, and whether the density of realized losses decreases as holders currently selling at large losses exhaust or take a step back.
If LTH SOPR remains above 1.0 and stablecoin inflows continue, the index has room to show lower values and the recovery becomes more credible. If the pattern of the last two months (brief improvement followed by a reversal) repeats, the index moves back toward High Impact and the mid-2018 and mid-2022 parallels noted last week become harder to rule out.
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