Bitcoin's Critical Support at $107,440 and the Risk of Short-Term Liquidation Pressure

Bitcoin’s price action near $110,000 has ignited intense scrutiny over the $107,440 support level, a critical threshold representing the six-month realized price for holders. This level acts as a gravitational anchor, reflecting the average purchase price of coins accumulated during the May–July 2025 rally [3]. On-chain data from platforms like Glassnode reveals that a breakdown below $107,440 could trigger cascading liquidation risks, particularly for short-term holders (STHs) who control 8.82% of the total supply [4]. These STHs, with wallets aged 1–3 months, are currently underwater, and their cost basis sits near $113,600 [2]. A sustained move below $108,500 could force panic selling as traders attempt to cut losses, creating a self-fulfilling downward spiral.

The fragility of this support zone is further underscored by historical patterns. When STH cost bases are breached, markets often enter multi-month correction phases, as seen in prior cycles [3]. For example, Bitcoin’s recent dip below the one-month and three-month realized prices of $115,300 and $113,700 has already eroded confidence among speculative investors [1]. If the $107,440 level fails, the next line of defense lies at $92–93K, where 3–6-month STHs hold significant supply [5]. However, this scenario would likely accelerate capitulation, as the broader cost basis for 2025 buyers has now fallen to just over $100,000 [1].

Investor behavior also plays a pivotal role in shaping near-term outcomes. Short-term holders have been selling at a loss, with over 50,000 BTC recorded in losses on July 15 and 37,000 BTC on July 25 [3]. This trend reflects a redistribution of supply from long-term to short-term holders, with over 223,602 BTC transferred in the last 30 days [3]. Such activity signals heightened volatility and a shift toward speculative positioning, which amplifies the risk of forced selling. Meanwhile, derivatives markets add another layer of complexity. Over $500 million in long positions were liquidated in August alone, and leveraged traders face systemic risks, as 1000x positions wiped out $852 million in 24 hours [5].

The derivatives landscape further complicates the outlook. A rally to $125,000—a level with $15 billion in short liquidation exposure—could trigger a self-reinforcing short squeeze, injecting billions into the market [5]. Conversely, a breakdown below $109K raises concerns about a deeper correction toward $103K, as key moving averages flip from support to resistance [5]. Open interest remains elevated at $44.5 billion, with short positions concentrated near $125K [1]. Historical patterns suggest that leveraged short liquidations often drive sharp reversals, but the recent divergence in on-chain activity—weak spot volume and rising speculative pressure—hints at a fragile market structure [4].

Despite these risks, institutional demand remains a stabilizing force. U.S. spot Bitcoin ETFs have attracted over $54 billion in cumulative inflows, signaling continued confidence in Bitcoin’s long-term value proposition [6]. However, this institutional strength may not offset short-term volatility if STHs and leveraged traders dominate near-term price action.

In conclusion, Bitcoin’s $107,440 support level is a linchpin for market stability. A breach would likely trigger a wave of short-term liquidations, deepening corrections and testing lower cost basis zones. While institutional inflows provide a counterbalance, the interplay between on-chain metrics and investor behavior suggests a precarious equilibrium. Investors must closely monitor STH activity, derivatives exposure, and ETF flows to navigate this critical juncture.

Source:
[1] Bitcoin Faces Increasing Pressure Below Key Cost Level [https://www.bitget.com/news/detail/12560604938713]
[2] Bitcoin (BTC) Critical Support: $110.8K 1–3M Holder Cost Basis at Risk, Glassnode Warns of Multi-Month Weakness if Lost [https://blockchain.news/flashnews/bitcoin-btc-critical-support-110-8k-1-3m-holder-cost-basis-at-risk-glassnode-warns-of-multi-month-weakness-if-lost]
[3] Bitcoin Short-Term Holders Are Selling At A Loss Amid Price Volatility [https://www.mitrade.com/insights/crypto-analysis/bitcoin/bitcoinist-BTCUSD-202508010923]
[4] Bitcoin News Today: Bitcoin STH Cost Basis Drives 7% Correction Risk With $110K Support and $140K Resistance in Focus [https://www.ainvest.com/news/bitcoin-news-today-bitcoin-sth-cost-basis-drives-7-correction-risk-110k-support-140k-resistance-focus-2507/]
[5] BTC Short-Squeeze Alert: Crypto Rover Flags $15B in ... [https://blockchain.news/flashnews/btc-short-squeeze-alert-crypto-rover-flags-15b-in-bitcoin-shorts-at-125-000-liquidation-level]
[6] Bitcoin's Critical $105K Support: A Strategic Buying ... [https://www.ainvest.com/news/bitcoin-critical-105k-support-strategic-buying-opportunity-short-term-weakness-2508/]