Bitcoin's $111k Standoff: LTH Selling vs. Fading Institutional Support

Bitcoin faces a critical juncture as on-chain data highlights signs of market exhaustion, raising concerns about the sustainability of its recent rally. According to analytics firm Glassnode, Bitcoin’s realized profit/loss ratio has surged to extreme levels above 10 in 2025, a historical indicator of cyclical peaks driven by profit-taking activity. The current drawdown from an all-time high of $124,000 to $111,012 represents a 10.5% decline, modest compared to past corrections but masking structural weaknesses in capital flow dynamics.

On-chain metrics reveal a fragile balance between institutional demand and long-term holder (LTH) distribution. LTHs have distributed 3.4 million BTC in profits since the bull cycle began, surpassing previous cycles and signaling significant selling pressure from seasoned investors. Meanwhile, US-traded Bitcoin spot ETF inflows, which previously absorbed heavy selling, have collapsed from 2,600 BTC per day to nearly zero around the Federal Reserve’s September 2025 rate decision. This imbalance has exacerbated downward momentum, with long-term holder distribution surging to 122,000 BTC per month.

Derivatives markets have amplified the correction through forced liquidations and deleveraging. Futures open interest fell sharply from $44.8 billion to $42.7 billion as Bitcoin broke below $113,000, with dense liquidation clusters between $114,000 and $112,000 driving aggressive selling. While this deleveraging reset has cleared excess leverage, it also exposed the market’s vulnerability to liquidity-driven swings. Options markets reflect heightened downside concerns, with put/call skew spiking from 1.5% to 17% following the correction. Total options open interest near all-time highs has created a gamma overhang, amplifying volatility—particularly to the downside, where dealers are positioned short gamma.

The $111,800 level has become a critical technical threshold for Bitcoin. This level represents the short-term holder cost basis and served as temporary support during recent selling. Maintaining this threshold could signal healthy consolidation, while a breakdown would increase the risk of deeper declines. Analysts from 10x Research warn that Bitcoin could swing $20,000 up or down in early Q4 2025, citing weak bullish drivers and whale selling of 147,000 BTC in September alone. Institutional demand must offset continued LTH distribution to avoid a prolonged cooling trend.

The broader market context underscores Bitcoin’s precarious position. The cumulative volume delta (CVD) across major exchanges has reverted to neutral, erasing the strong buyer dominance seen earlier in the year. This signals waning conviction among spot participants near $111,000. Meanwhile, the percentage of Bitcoin supply in profit has reached a critical 90% threshold, historically preceding corrective phases. Analysts note that macroeconomic catalysts—such as a potential U.S. rate cut in September and possible altcoin ETF approvals in October—could reignite momentum. However, short-term corrections may persist, offering entry points for long-term investors ahead of a potential fall 2025 rally.

Bitcoin’s ability to defend the $111,000 zone will determine whether this correction is a healthy consolidation or the start of a deeper downturn. Without renewed institutional accumulation, the risk of significant price declines rises, particularly as on-chain data reveals a market nearing exhaustion.