Bitcoin Rally Loses Steam as Traders Turn Defensive
Bitcoin's lost its momentum. After months pushing to record highs, it's sitting above $111,000 now, up only 2% this past week.
Quick overview
- Bitcoin's momentum has faded, currently sitting above $111,000 after a drop from over $126,000.
- Capital is shifting from spot markets and ETFs to derivatives, indicating a cautious market sentiment.
- The critical support level to watch is $113,000; falling below this could lead to further declines.
- Long-term holders are selling significant amounts of BTC daily, contributing to the overall market weakness.
Bitcoin’s lost its momentum. After months pushing to record highs, it’s sitting above $111,000 now, up only 2% this past week. Dropping from over $126,000 shows the rally’s fading.
Capital is leaving spot markets and ETFs. Money’s rotating into derivatives instead, with traders hedging rather than betting on more upside. Glassnode and CryptoQuant both see signs of market exhaustion.
The key level to watch is $113,000. That’s where short-term holders bought in, according to Glassnode. Fall below that, and recent buyers are underwater. That usually shakes out weaker hands and kills confidence.
Long-term holders have been selling hard. They’ve been dumping over 22,000 BTC per day since July. All that selling is sapping momentum. Any real recovery looks hard from here. Drop under $113,000? Bitcoin could head for $108,000 or $97,000. At those prices, 15% to 25% of all coins would be underwater.
CryptoQuant sees the same thing from a different angle. ETF money has dried up after months of strong inflows. Exchange balances are going up, meaning traders are positioning to sell when things get volatile rather than buy on weakness.
This isn’t money leaving crypto entirely. It’s rotating within the ecosystem. Liquidity is moving to futures and options where volatility premiums have spiked. Similar shifts happened in 2021 and mid-2022 when speculative leverage took over from spot buying.
Options data backs up the cautious mood. Open interest hit record highs as traders lean on derivatives to hedge downside rather than play for gains. Market makers are staying delta neutral, selling into rallies and buying dips. With volatility high and put demand heavy, rallies get capped by hedging flows instead of real conviction.
Bitcoin isn’t breaking down. It’s catching its breath. CryptoQuant thinks this is consolidation, not collapse. Both firms say a real recovery needs renewed spot demand and calmer derivatives activity, which probably depends on Fed rate cuts or ETF inflows picking back up.
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