Bitcoin reaches record high after several months of continuous rise The pulse has slowed as BTC surged above $111,000 on Friday afternoon Hong Kong time, up 2% from last week, according to CoinDesk Markets data.
The pullback from the recent peak above $126,000 has been marked by momentum faltering below key cost-basis levels, with capital leaving the spot market and ETFs, as well as defensive options positions.
In a recent report, Glassnode cited repeated breakdowns below key volumes as evidence of market exhaustion. At the same time, CryptoQuant, in a note shared with CoinDesk, found similar tensions in declining real profits and declining exchange flows.
They both argue that capital is staying in crypto but moving from spot to derivatives, with volatility now the main traded asset. Until that balance is restored, rallies are likely to fade rather than follow through.
Glassnode points to around $113,000, based on costs to short-term holders, as the dividing line between renewed strength and deeper consolidation. The firm says a fall below that range signals that recent buyers are now at a loss, losing confidence and forcing weak hands to capitulate.
Meanwhile, long-term holders have been selling at a pace of over 22,000 BTC per day since July, a trend that is slowing the momentum and putting pressure on any sustained recovery. If Bitcoin fails to reclaim the $113,000 range, Glassnode warned that losses could deepen to the $108,000-$97,000 range, where 15%-25% of the supply has historically become unprofitable.
CryptoQuant’s data reinforces that view from a flow perspective. ETF flows have cooled after months of accumulation, while exchange reserves are rising again, a sign that traders are preparing to sell into volatility rather than accumulate.
The firm characterizes this as a rotation of capital within crypto rather than a complete exit, as liquidity shifts towards futures and options markets where volatility premiums have increased. This reflects the structural changes seen between 2021 and 2022, when speculative leverage replaced spot convergence.
The options data echoes a broader sense of caution. Glassnode reports record-high open interest as traders rely on derivatives for hedging rather than making bullish bets as demand for puts increases during maturity periods.
Glassnode notes that market makers’ hedging has tended to smooth out short-term price action, selling in rallies and buying dips to remain delta (market) neutral. Increased volatility and heavy put demand have kept the market under pressure, with rallies limited by hedging flows rather than broader conviction.
These dynamics have left the market in limbo, where price action is shaped more by risk management than directional conviction.
CryptoQuant interprets these flows as a sign of consolidation rather than collapse, writing that liquidity is staying within crypto’s ecosystem, moving through different instruments as investors wait for clear macro or policy signals before committing new capital.
Both companies suggest that a meaningful recovery will require renewed spot demand and quiet derivatives activity, conditions that could depend on the timing of a Fed rate cut or a revival in ETF flows.
For now, Bitcoin isn’t so much breaking out as holding its breath, trading less like a revolution and more like a rotation. Volatility may still be the market’s favorite asset class, but sooner or later even traders get tired of trading fear.