A Structural Reset

Executive Summary

• Bitcoin price momentum is facing its first wave of meaningful resistance, as price attempts to consolidate and break above key technical and on-chain levels, namely the 111DMA ($91.3k) and the Short-Term Holder cost-basis ($93.2k).
• Several structural resets are evident across multiple facets of the Bitcoin economy, indicating that much of the speculative excess has been flushed out during the recent downturn.
• HOLDling remains the primary dynamic amongst LTHs as accumulation pressures continue to outweigh the propensity for investors to spend and de-risk.
• If the market continues to rise, a notable increase in sell-side pressure is expected from Long-Term Holders who would now be holding over +350% unrealized profits. Furthermore, a dense cluster of coins sits above the spot price, suggesting some investors may opt to exit at or near their break-even price, providing an additional source of sell-side pressure.

Pricing Levels

Momentum in the recovery of the Bitcoin price is facing its first wave of meaningful resistance, as price attempts to consolidate and break above the $93k to $95k region. This price zone is the range low of a multi-month consolidation phase that price traded between Nov 2024 and Feb 2025. An important shift appears to be underway, with the spot price breaking the prevailing downtrend, and establishing a new higher high price pattern.

In this edition, we will utilize a host of on-chain and technical metrics to gauge the strength of the markets momentum, and evaluate the durability of this upward move through the lens of spending dynamics, and investor sentiment.

To investigate the current state of market momentum, we can evaluate how the market is responding to a combination of key technical and on-chain indicators. When these two models align, their confluence provides a stronger, more reliable signal.

In this analysis, we focus on the 111DMA, which is a technical average that many Bitcoin analysts employ for assessing momentum. Alongside this, we will use the Short-Term Holder cost basis, which has historically served as a critical pricing level delineating bullish and bearish market regimes.

• 111DMA: $91.3k
• Short-Term Holder Cost-Basis: $93.2k

The price has recently surged above both of these pricing models, and is now attempting to consolidate within this zone. This highlights a noteworthy degree of strength behind this upwards swing. However, these are levels that must be broken and held for further price appreciation, as a rejection of this level would push the price back into bearish territory, and return many investors to a state of meaningful unrealized loss.

Market drawdowns are challenging times for investors, as financial pain typically increases as the depth and duration of the drawdown extends. We can assess the component of ‘time pain’ by evaluating the number of days (out of last 90-days) where the spot price has traded below both of these levels.

Through this measure, the prevailing drawdown has experienced a similar duration to those seen throughout the cycle. Furthermore, we can see that the duration component has not reached the extreme levels normally associated with prolonged bear market regimes, suggesting the recent drawdown may not be of bear market proportions just yet.

We can increase the granularity of this observation by evaluating the cost-basis of various sub-groups within the Short-Term Holder cohort. We consider these as a sort of fast-to-slow ribbon of cost basis levels, providing a form of momentum indicator:

The recent market surge has shifted investors who have held coins for longer than 1-month into a profitable position. This has led to a notable reduction in financial pressure and stress on these investors, and can be considered as an early indication for positive market momentum if sustained.

A Market Reset

In this section of the article, we will present a series of charts to profile a set of resets which have taken place across many areas of the Bitcoin economy. These ‘resets’ are typical of corrections, where much of the local froth dissipates from the market.

The MVRV Ratio measures the degree of unrealized profit or loss held by the average investor. This metric provides insight into the financial pressures the average investor is experiencing, and can help identify periods when they are more likely to take chips off of the table (realized a profit), or to capitulate under drawdown pressure (realize a loss).

By assessing the long-term mean of the MVRV Ratio, as well as ±1 standard deviation bands, we are able to clearly delineate between market regimes.

• Below -1 Standard Deviation: Deep bear market.
• Between -1 and long-term mean: Recovery phase.
• Above long-term mean: Early bull market.
• Above +1 Standard Deviation: Euphoric bull market.

During this downtrend, investor unrealized gains have fallen back to their long-term mean (MVRV of 1.74). A similar market structure can be seen during the previous consolidation phase in 2024, which peaked during the yen-carry-trade unwind on 5-Aug-2024.

The long-term mean of MVRV effectively acts as a support level for investor confidence, and a sustained move of MVRV back above this level would be a constructive observation.

Next, we look towards the percentage of the circulating supply which is held in a profitable position. This metric simply considers the status of a coin from a binary perspective of “in loss” or “in profit” based on its original cost basis. This differs from the MVRV Ratio, which considers the USD magnitude of unrealized profit or loss (i.e. distance between spot price and cost basis).

The circulating supply which is held in a profitable position remains elevated, trading at a value of 88%. The only underwater investors are those who purchased coins during the Dec-Feb period, centred around $95k and $100k.

Similar to the MVRV Ratio, the percent of supply in profit has also recorded a strong bounce off its long-term mean, which bolsters our assessment that a meaningful reset of investor expectations is taking place.

Moving into the spending domain (analysis of coins moved each day), we can see a similar story emerges.

During the downtrend, the Realized Profit/Loss Ratio approached its break-even value, suggesting the size of profit and loss taking events were balanced. This displays a neutral sentiment across investors. The price rally has driven this ratio higher and back into profit dominated territory. This suggests the onset of a meaningful recovery, where profit taking activity returns, and demand has thus far been able to absorb it.

The above observation is also supported by the SOPR metric, which gauges the relative magnitude of profit or loss taken across each spent coin. It can be thought of as the average profit multiple locked in by spent coins each day.

SOPR has also found strong support at its equilibrium value of 1.0, and has remained within a profit dominated regime. It is constructive to observe swift and short undercuts of the neutral level, which suggests that investors who bought near the local top are being flushed out, and others are buying and defending their cost-basis.

The Sell-Side Risk Ratio is a powerful tool which can assess the degree of equilibrium the market has reached. We can consider this metric under the following framework:

• High values indicate that investors spend coins at a large profit or loss relative to their cost basis. This condition indicates that the market likely needs to re-find equilibrium and usually follows a high volatility price move.
• Low values indicate that most coins are being spent relatively close to their break-even cost basis, suggesting a degree of equilibrium has been reached. This condition often signifies an exhaustion of ‘profit and loss’ within the current price range and usually describes a low volatility environment.

The Sell-Side Risk Ratio remains below its low value band, suggesting that most coins moved on-chain are transacting near their original acquisition price. Generally speaking, this indicates that the current price range is no longer an attractive area for investors to take profit or loss, and is typical of consolidation ranges, where a new range expansion is required to stimulate the next wave of capital flows.

HODLing On

As market conditions improve, Long-Term Holder spending volumes remain relatively light, indicating HODLing is the primary behavior amongst this cohort. The balance held by tenured investors continues to move higher, with +254k BTC migrating across the 155-day threshold since the recent low, many of which were accumulated at prices above $95k.

This suggests a degree of confidence has returned, and accumulation pressures are outweighing the propensity for investors to spend and de-risk. This also provides confluence to the notion that the price range is no longer an attractive region for these investors to take profit in.

Having established that the LTH cohort is expressing a preference to hold onto their supply, we can attempt to quantify the potential price levels required to entice them to part with their coins, and commence the next wave of profit taking.

Historically speaking, the Long-Term Holder cohort typically ramps up their spending pressure when the average member is holding a +350% unrealized profit margin. Reconciling this information with the spot price, the average LTH is expected to hit a 350% profit margin at the $99.9k level.

As such, we can anticipate an uptick in sell-side pressure as the market approaches this zone, making it an area that will likely require substantial buy-side demand to absorb the distribution, and sustain upwards momentum.

Additionally, a significant concentration of coins remain held at a loss within this $95k to $98k region. As the market approaches this zone, some investors may opt to exit at or near their break-even price, introducing additional sell-side resistance. This would compound the expected increase in LTH distribution, creating an important resistance level to keep an eye on.

The region above $100k has a relatively small volume of coins with a cost basis in that the area. If the market can successfully navigate the sell-side pressure within the $95k to $98k corridor, it may enter a region with minimal resistance, paving the way for a run back towards price discovery, and a new ATH.

Summary and Conclusion

Following a surge in price over the last two weeks, Bitcoin’s price momentum is encountering its first meaningful wave of resistance. Crucially, price has broken above three critical levels: the Short-Term Holder cost-basis, the 111-Day Moving Average, and the $109K range low from the all-time high formation.

These levels represent a critical inflection point that must be upheld. Failure to stabilize above these levels would push the price back into the consolidation range, and return many investors to a state of meaningful unrealized loss.

Under the surface, a structural reset across many sectors of the Bitcoin economy has taken place, indicating that much of the speculative excess has been flushed out. However, investor profit and loss taking remains light, whilst Long-Term Holders remain largely inactive in the market. This creates a delicate market environment, with latent volatility and a vulnerability to shocks in either direction.

Disclaimer: This report does not provide any investment advice. All data is provided for informational, and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. 

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