Bitcoin ($BTC) slid 7.59% between October 5 and 8, falling from a peak of $87,000 to a low of $80,393. The asset has since rebounded and was trading at $82,800 at press time.

While Bitcoin's higher-timeframe price structure remains bullish, buyers do not currently hold a clear advantage. Elevated market stress readings and net Bitcoin flows into exchanges underscore why caution is warranted in the near term, even as the broader structure stays intact.

Exchange Flows Point to Short-Term Caution

According to CryptoQuant, 11,325 BTC flowed into exchanges between October 7 and 9 — a figure that exceeded the 7,520 BTC in outflows recorded from October 3 to 9, leaving net flows pointed inward. Inflows receive close attention from traders because coins deposited on exchange wallets can be readily sold, which is why sustained net inflows are often read as a potential source of selling pressure.

Crypto analyst CoinNiel highlighted additional warning signs, including a dip in funding rates and a decline in Open Interest compared with early October, urging bulls to remain cautious over the short term. Funding rates — the periodic payments that keep perpetual futures prices aligned with spot — and Open Interest, the total number of outstanding derivative contracts, are standard gauges of market leverage, so shifts in either offer a window into how aggressively traders are positioned.

Negative spot ETF flows — the daily net movement of money in and out of spot Bitcoin exchange-traded funds that many observers track as a read on institutional demand — and a long squeeze, in which falling prices force leveraged long positions to liquidate, may help explain Bitcoin's price dip, but they have also placed the market under visible stress.

Bitcoin Stress Index Returns to Calm Zone After Weekly Peak of 49.9

The Bitcoin Stress Index measures intensity of a sell-off through the dominance of market selling, according to analyst Axel Adler Jr. The metric posted a weekly peak of 49.9 on October 7. Readings between 40 and 55 reflect elevated market stress, although the 55 threshold has not been breached in three months.

The large wave of long liquidations on October 7 and 8 has since subsided, reinforcing the view that market sell orders dominated spot and perpetuals markets on October 7. The index has subsequently fallen to a reading of 7, well within calm territory.

Adler cautioned that a stress index reading above 55, combined with a price drop back below $80,700, would constitute a strong warning sign.

On the 1-day chart, Bitcoin's swing structure remains bullish. The recent correction has only just dipped below the 50% retracement level at $81,230, a widely watched Fibonacci marker. While there is room for a further drawdown toward $77,700, the structure has held. As such, short-term caution is warranted, but a move back above $83,600 could indicate that the correction has likely ended.

Outlook

The Bitcoin Market Stress Index peaked on October 7 before re-entering calm territory. Despite the decline in stress and the overall bullish swing structure, a short-term cautious outlook for $BTC remains warranted.

Source: CryptoNewsNet — original reporting by AMBCrypto