Bitcoin Pauses as Traders Shift to Derivatives
After months of steady gains, Bitcoin (BTC) is showing signs of fatigue, trading above $111,000 Friday afternoon (Hong Kong time), up about 2% over the past week. The pullback from recent highs above $126,000 reflects waning momentum, with long-term holders selling into strength and traders rotating into defensive derivatives positions.
Spot Market Strain
Glassnode notes repeated declines below key cost-basis levels, signaling market exhaustion, while CryptoQuant highlights shrinking realized profits and rising exchange inflows. Both reports suggest capital is staying in crypto but shifting from spot and ETFs to futures and options, making volatility the primary traded asset.
Short-term holders’ cost basis near $113,000 is now a critical line; falling below it indicates recent buyers are in the red, eroding confidence and pressuring weaker hands.
Long-Term Holder Activity
Long-term holders have sold over 22,000 BTC per day since July, continuing to dampen momentum. If BTC cannot reclaim $113,000, losses could extend to $108,000–$97,000, historically unprofitable zones for 15%–25% of supply.
Derivatives and Hedging
ETF inflows have slowed and exchange reserves are rising, while options markets show record-high open interest and increasing put demand. Market makers’ hedging—selling rallies and buying dips—has limited upside, leaving price action largely delta-neutral.
Market Outlook
Bitcoin is in a rotation and consolidation phase rather than a collapse. Recovery depends on renewed spot demand, calmer derivatives activity, and potential macro catalysts such as Fed rate cuts or renewed ETF inflows. For now, BTC is catching its breath, with volatility dominating the market.
