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Bitcoin (BTC) is approaching a critical market crossroads and needs to stay above $92,500 to sustain its bullish momentum, according to a recent report from Glassnode.
The report drew comparisons between the current price structure and previous cycle peaks, raising concerns about potential downside risks if buying pressure diminishes.
Supply conditions and historical trends
A significant indicator in evaluating Bitcoin’s susceptibility is the supply held by short-term holders (STH), which reflects patterns observed in May 2021. Similar accumulation trends during that cycle resulted in increased sensitivity to price drops, leading to large-scale distribution events.
Bitcoin’s current price fluctuates between $1,000 and $5,000 above the STH cost basis of $92,500. This level has historically served as a pivotal point, delineating the line between bullish and bearish trends.
If Bitcoin dips below this mark, the report cautions about a potential surge in selling pressure, reminiscent of earlier post-all-time-high (ATH) corrections in May and November 2021, as well as February and April of the previous year.
Past corrections have followed a recognizable pattern: a rally into price discovery followed by a consolidation phase where realized supply density increases and selling pressure builds.
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Historical data suggests that if bearish conditions escalate, Bitcoin could retrace toward the lower boundary of the STH cost basis model, which currently stands at $71,600.
The report noted that if Bitcoin breaks the $92,500 threshold, panic selling among short-term holders could exacerbate losses. On the other hand, if demand remains robust, BTC could stabilize above its ATH and establish a new trading range, postponing further downside risks.
Derivatives sentiment
Market momentum is diminishing, as evidenced by declining open interest and decreasing perpetual futures funding rates.
While Bitcoin and Ethereum (ETH) funding rates remain slightly positive, Solana (SOL) and memecoins have experienced a shift to negative funding rates, indicating a move towards a risk-off sentiment.
The contraction in open interest (OI) further supports this risk-off trend, with memecoins’ OI dropping by 52.1%. In comparison, Bitcoin’s OI fell by approximately 11.1%.
The significant decline in memecoin OI underscores a rapid withdrawal of speculative capital, suggesting that traders are moving away from riskier positions amid growing market uncertainty.
The post Bitcoin must hold $92.5k amid accumulation phase reminiscent of May 2021 appeared first on CryptoSlate.
