Bitcoin's Structural Headwinds: Why the $93k–$120k Supply Overhang Remains the Key Obstacle to Recovery

Bitcoin's price action in late 2025 has been defined by a persistent structural ceiling between $93k and $120k, a range where accumulated supply continues to stifle recovery attempts. On-chain and derivatives market dynamics underscore a fragile equilibrium, with overhead supply acting as both a psychological and mechanical barrier to upside momentum. This analysis examines the interplay of supply distribution, investor behavior, and derivatives positioning to explain why the $93k–$120k overhang remains a critical headwind for Bitcoin's near-term trajectory.

On-Chain: A Top-Heavy Market Structure

The current price of Bitcoin (~$85.6k) remains below the 0.75 quantile (~$95k) and the Short-Term Holder Cost Basis at $101.5k according to Glassnode, two critical thresholds that define the upper bounds of the supply overhang. Overhead supply in this range, accumulated by top buyers during prior rallies, has created a top-heavy market structure. This concentration of sell pressure intensifies as the price drifts lower, with 23.7% of the circulating supply currently held at a loss.

The maturation of loss-bearing supply into long-term holder cohorts further exacerbates fragility. With 6.7 million BTC (7D-SMA) underwater, the risk of capitulation-driven selling has risen to its highest level in this cycle. Notably, the cohort of supply attributed to loss sellers has grown to 360k BTC, amplifying the likelihood of forced liquidations. This dynamic mirrors early transitional phases of prior bear markets, where investor frustration and time-driven stress tests precede sharper corrections.

Structural support near $81.3k-the True Market Mean has so far prevented a deeper breakdown. However, spot demand remains selective and uncoordinated, with corporate treasury flows contributing to episodic volatility rather than sustained accumulation. The absence of coordinated buyer participation highlights a lack of conviction in Bitcoin's near-term recovery.

Derivatives Markets: De-Risking and Range-Bound Regime

Futures markets reflect a de-risking environment, with open interest trending lower and funding rates near neutral levels. This signals reduced speculative positioning and a shift toward balance sheet management among traders. Unlike prior cycles, leverage is no longer a primary driver of price action, as both longs and shorts have scaled back exposure.

Options markets reinforce the range-bound narrative. Post-FOMC volatility compression and a put-call ratio of 0.67 for end-of-month expiries indicate a preference for premium harvesting over directional bets. The volatility surface has flattened to cycle lows, pricing in diminished expectations for extreme price movements. Meanwhile, large December expiries are exerting expiry-driven pressure, pinning price action into year-end and limiting breakout potential.

Implications and Path Forward

Bitcoin's trajectory hinges on two critical catalysts:
1. Seller Exhaustion Above $95k: A sustained rally above the 0.75 quantile could absorb overhead supply and trigger a re-rating of the Short-Term Holder Cost Basis at $101.5k.
2. Liquidity Influx: A renewed surge in institutional or retail demand would be required to offset the 6.7 million BTC in loss-bearing supply.

Absent either of these, the market is likely to remain trapped in a time-driven correction. The structural ceiling between $93k–$120k will continue to dominate price behavior until key cost-basis levels are reclaimed or seller-side pressure dissipates.

Conclusion

Bitcoin's $93k–$120k supply overhang is not merely a technical resistance level but a structural impediment rooted in on-chain distribution and derivatives positioning. With loss-bearing supply at record highs and derivatives markets signaling defensive positioning, the path to recovery remains contingent on overcoming this overhead burden. Investors must remain vigilant to the risk of further capitulation-driven selling, particularly as year-end expiries and time-driven stress tests intensify.