Woofun AI reports that Bitcoin’s derivatives momentum has cooled significantly, yet the asset remains in neutral territory rather than entering a bearish phase, according to on-chain analyst Axel Adler Jr. This assessment, shared via the CryptoQuant analytics platform, identifies a shift in short-term sentiment that has not yet triggered widespread selling pressure.

The Bitcoin Derivative Market Power indicator, which measures the capacity of futures and options markets to drive price gains, has plummeted from 41% to 13% in recent days. A reading of 41% previously signaled strong bullish influence from these derivative instruments. The current 13% level reflects a substantial reduction in that upward pressure, indicating that the derivatives sector is no longer the primary engine for price appreciation.

Structurally, this decline does not automatically imply a bearish phase. Instead, it suggests that the market’s ability to push prices higher through derivative instruments has weakened, leaving Bitcoin in a more neutral position. The metric’s drop signifies a loss of aggressive buying leverage rather than an onset of panic selling, distinguishing the current environment from a typical downturn.

Notably, Adler points to a similar pattern observed in June, when Bitcoin experienced a price correction alongside a comparable drop in the Derivative Market Power indicator.

However, he notes that current buying demand appears more resilient than it was during that period. This distinction is critical for traders assessing whether the market is merely pausing or preparing for a deeper downturn.

In June, the indicator’s decline preceded a period of selling pressure and price consolidation. The current environment, by contrast, shows firmer spot market demand, which may help absorb any potential sell-offs from derivative positions.

Woofun AI data shows that derivative fund flows could become a decisive factor in the near term, as the interplay between spot resilience and derivative weakness defines the immediate trajectory.

If the Derivative Market Power indicator turns negative again, selling pressure could regain the upper hand, potentially leading to a more pronounced correction. Conversely, if the indicator stabilizes or recovers, it may signal that the market is regaining its bullish footing. Bitcoin’s price action has been relatively range-bound, and the derivatives market’s cooling trend explains the lack of strong directional movement.

Bitcoin’s derivatives market has lost significant upside momentum, but the broader market structure remains neutral rather than bearish. The decline in the indicator from 41% to 13% reflects reduced derivative-driven price pressure, not a shift to aggressive selling. For now, the market appears to be in a waiting phase, with spot demand providing a floor beneath prices.