Short-Term Sellers and Buyers Create Perfect Storm for Bitcoin’s Stalled Rally

Bitcoin remains within the $110,000–$116,000 “air gap,” a range it has inhabited since retreating from its August all-time high. After a rebound from $107,000, which was supported by dip-buying activity, the price has since faced selling pressure from short-term holders, limiting upward momentum. This selling pressure is primarily coming from the 3–6 month investment cohort, which has been realizing approximately $189 million per day (14-day simple moving average) in profits. These actions suggest that early buyers from the February–May dip are taking profits during the current bounce.

In parallel, recent top-buyers are also contributing to downward pressure by realizing losses. The up-to-3-month cohort has recorded losses of up to $152 million per day (14-day SMA), a pattern that mirrors past market stress periods in April 2024 and January 2025. For a potential bullish continuation, the price must stabilize above $114,000 to restore confidence and attract fresh inflows. Sustained pressure below this level could expose the next major supply cluster at $93,000, especially if short-term holders fall back into loss territory.

Despite these challenges, on-chain liquidity remains constructive but is trending lower. Net Realized Profit, expressed as a percentage of market cap, peaked at 0.065% during the August rally and has since declined, although it remains elevated by historical standards. As long as the price holds above $108,000, the liquidity environment continues to provide some support. However, a deeper breakdown could erode this inflow and stall further rallies.

TradFi demand, once a critical driver of Bitcoin’s performance, has significantly weakened. US spot ETF net flows have dropped sharply since early August, hovering near ±500 BTC per day (14-day SMA), a far cry from the inflow intensity that fueled previous rallies. The reduced momentum from institutional investors adds fragility to the current market structure, as derivatives markets now play a more prominent role in absorbing sell pressure and shaping price action.

The futures market, in particular, appears balanced rather than overheated. The 3-month annualized futures basis remains below 10% despite higher prices, indicating steady demand for leverage without the extremes that often precede liquidations. Perpetual futures volume is also muted, consistent with a post-euphoric lull, which suggests a more stable and accumulation-based environment rather than speculative excess.

Options activity has also gained importance in managing risk, with Bitcoin options open interest reaching record highs. Institutions are increasingly using options to hedge exposure through strategies like protective puts and covered calls, reflecting a more mature and liquid market structure. Implied volatility is declining, signaling a more stable price environment and a market that is managing downside risk while maintaining a bullish bias.

The market’s next decisive move will hinge on its ability to reclaim and hold above $114,000, a level that could restore confidence and draw in new demand. Failure to do so could trigger renewed stress among short-term holders, with $108,000 and $93,000 serving as critical downside levels. While derivatives activity is currently supporting the price structure, broader demand must strengthen to drive a sustained rally.