The key watershed has been lost, and the Fed's Eagle Shadow may be restarting market fluctuations

Bitcoin is exhausted and market beliefs are being tested。

Submitted by: Chris Beamish, CriptoVizArt, Antoine Colpaert, Glassnode

Photo by AididiaoJP, Foresight News

The struggle of bitcoin below the critical cost base reflects the weakening of demand and the continued sale of long-term holders. While volatility has cooled and options are relatively balanced, the market is now dependent on the Fed meeting's expectation that any hawk accident could cause further volatility。

Summary

• BITCOIN REBOUNDED ON WEEKENDS FROM $107K TO $118K SUPPLY CLUSTERS, IMITATING A BRIEF REBOUND AFTER A PREVIOUS HIGH, BUT CONTINUED PRESSURE FROM LONG-TERM HOLDERS LIMITED SUBSEQUENT INCREASES。
• The market continues to struggle over the short-term holder cost base (approximately $113,000), a critical battlefield between rising and falling momentum. The failure to recover that level increased the risk of a deeper retreat from achieving prices to active investors (approximately $88,000)。
• SHORT-TERM HOLDERS ARE RETREATING AT A LOSS, WHILE LONG-TERM HOLDERS ARE STILL THE MAIN FORCE OF HEAVY PUSH (ABOUT -104,000 BTC/MONTH), INDICATING A WEAKENING OF CONVICTION AND CONTINUED ABSORPTION OF SUPPLIES。
• Implied volatility has been drastically cooled after the collapse in October, and the bias has been flattening, and the current of options reflects controlled upspaces and controlled downs。
• The calm of the current volatility rate depends on the next Federal Reserve decision. The results of the doves will remain stable, but any hawk accident could trigger renewed volatility and lower protection needs。

Insight on the chain

Known rebound mode

LAST WEEKEND, AFTER A SHORT FALL TO THE LOWER BOUNDARY OF THE TOP BUYER SUPPLY CLUSTER (US$ 107,000 TO US$ 118,000), BITCOIN PERFORMED A SHORT RECOVERY. BASED ON THE HEAT OF THE COST BASE DISTRIBUTION, THE PRICE REBOUNDED FROM THE MIDDLE LINE CLOSE TO $116K AND THEN FELL BACK TO APPROXIMATELY $113K。

This structure closely reflects the record-high rebound pattern observed in the second to third quarters of 2024 and the first quarter of 2025, i.e., the temporary rebound, but demand was quickly absorbed by the top supply. In the current circumstances, the new round of long-term holders ' sales further magnifies the resistance of the supply zone and highlights the continuing momentum of high-level profitability constraints。

Hard to keep the line

After a weekend rebound, Bitcoin briefly recovered a level of approximately $113,000 near the short-term holder cost base, which is usually seen as a dividing line between rising and falling momentum. Maintaining this threshold usually indicates that demand is strong enough to absorb persistent pressure on sales. However, it was not maintained above that level, especially after six months of continuous trading, indicating that demand was weakening。

Over the past two weeks, Bitcoin has difficulty collecting weekly candles above that critical level, increasing the risk of further weakening in the future. If this phase continues, the next critical anchor is near the realization of prices by active investors of approximately $88,000, an indicator that reflects the cost basis of dynamic flows of supplies and usually marks a deeper revision phase in the previous cycle。

Short-term holder pressure

Extending the analysis to investor sentiment, further market weakness is likely to be driven by short-term holders who are the top buyers of the now-lost exit. Net unrealized profits/loss indicators for short-term holders help to assess such pressures by measuring the proportion of unrealized profits or losses to market value。

Historically, negative depth values coincided with the surrender phase before the formation of the bottom segment of the market. The recent fall to US$ 10.77 million has pushed net unrealized profits/losses of short-term holders to -0.05, which is a minor loss compared to -0.1 to -0.2 during the typical medium-term cattle market amendment period, or below -0.2 at the depth bear market low point。

AS LONG AS BITCOIN IS TRADED IN THE TOP BUYER CLUSTER OF $107K TO $117K, THE MARKET IS IN A DELICATE BALANCE, NOT YET FULLY SURRENDERED, BUT IS INCREASINGLY UNFAVOURABLE AS BELIEFS CONTINUE TO ERODE。

Long-term holders sold

BASED ON PREVIOUS OBSERVATIONS, PERSISTENT SALES BY LONG-TERM HOLDERS CONTINUE TO DRAG MARKET STRUCTURES. THE CHANGE IN THE NET POSITION OF LONG-TERM HOLDERS HAS FALLEN TO -104,000 BTCS PER MONTH, HIGHLIGHTING THE MOST SIGNIFICANT WAVE OF SALES SINCE MID-JULY。

This persistent pressure on sales is consistent with the broader evidence of depletion observed in the market, as experienced investors continue to achieve profits in the face of declining demand。

Historically, major market expansion began only after long-term holders moved from net sales to continuous accumulation. Thus, the restoration of net positive inflows to this group remains a key prerequisite for restoring market resilience and laying the foundations for the next round of cattle markets. Prior to this shift, the sale of long-term investors is likely to continue to press prices。

To measure the strength of long-term holders' sales, we can turn to the amount of transfers that long-term holders transfer to an exchange (30 days of simple moving average line), which captures the currency value transferred by experienced investors for potential sale. The target has soared to about $293 million per day, more than twice the benchmark level of $100 million to $125 million that has prevailed since November 2024。

Such a high level of transfer activity indicates that long-term investors continue to realize profits, increasing the pressure on sellers. The current pattern is very similar to August 2024, when long-term holders were active and prices were slowing down. Unless such transfers recede, spot demand will be difficult to absorb sustained sales, making the market more susceptible to further cooling in the coming weeks。

Underlink Insight

The options market cooled

Turning to options markets, recent data show that the pressure on volatility following the collapse of October 10 continues to subside. The 30-day volatility of Bitcoin has fallen to 42.6 per cent, down slightly from 44 per cent last week, reflecting a more calm price movement. At the same time, the expected implied volatility of the representative traders has declined even more sharply, as participants have removed downside shocks and reduced protection needs。

The contract adjustment for the shorter term was the largest,1 with the implied fluctuations in the life-cycle flats falling by more than 10 volatility points to about 40 per cent, while the contracts for the period from 1 month to 6 months declined by only 1-2 points, maintaining close to 40 per cent. The flatening of this term structure indicates that traders expect less shocks in the near term。

The curve also suggests that the expected volatility will slowly rise to about 45 per cent over the next few months, rather than the shock surge。

Resize Low

The mitigation of the implied volatility rate has also translated into a significant shift in the 25-Delta bias, which measures the relative cost of looking down options versus rising options. Positive bias indicates that there is a premium for a downside trading. After the clean-up in October, the cyclical bias surged to more than 20 per cent, indicating a strong demand for lower protection. Since then, it has collapsed to a neutral level with a slight rebound but a very low intensity。

Contracts with longer durations, such as one month and three months, are also subject to drastic replacements, showing only a modest drop-over. This shift indicates that traders have removed most of their down-line hedges. The holdout is now closer to a "moderate look-up/two-way" rather than a "negative panic" low, consistent with the broader stability seen in the recent price movements of Bitcoin。

Selectively looking at the rise

As the bias normalizes, attention turns to where traders invest the money. Looking at the increase in options now varies significantly according to the right price. At 11.50 million United States dollars, the net buy-in of the right-to-go margin remained positive, indicating that, with the recovery in prices over the past two weeks, traders continued to pay for recent top-run space. By contrast, at $120,000, a nominal increase in the right to option rights was sold in excess of the purchase, resulting in a negative net entitlement。

This set-up reflects the position of "temperature rebound, not full breakthrough". Dealers are willing to pay for increases closer to spot prices, but to finance these positions by selling options for higher business options. The resulting price differential structure implies a cautious optimism that seeks to engage further, but lacks confidence in a comprehensive re-testing of historical heights。

Market pricing is back under control

In order to improve the overall situation, we can turn to market options. Since 24 October, traders have been buying $110,000 to watch the fall in options, as Bitcoin has risen, indicating the need for immediate downfall protection. At the same time, $105 million of drop options were sold more actively, demonstrating participants ' willingness to collect the right money by providing insurance at that deeper right price。

THIS CONTRAST HIGHLIGHTS A MARKET IN WHICH A SHALLOW RETREAT IS EXPECTED RATHER THAN ANOTHER MAJOR WAVE OF LIQUIDATION. DEALERS SEEM TO THINK THAT IT IS POSSIBLE (AT A $110,000 HEDGE) AT THE CURRENT LEVEL, BUT LESS LIKELY TO FALL COMPLETELY AT $150,000 K. THE WHOLE SILO SUPPORTS THE VIEW THAT THE WORST PERIOD OF DELEVERAGING IN OCTOBER HAS PASSED, AND THAT MARKETS NOW FOCUS ON INTER-TRAFFIC AND VOLATILE HARVESTS, RATHER THAN DEFENSIVE HEDGES AGAINST ANOTHER SHARP SELL。

Conclusions

The chain pattern continues to reflect a market in revision and recalibration. Bitcoin failed to maintain the short-term holder cost base, highlighting the decline in kinetic energy and the continuing pressure on short- and long-term investors to sell. Increased sales by long-term holders and high transfers to exchanges highlight the phase of demand depletion, suggesting that markets may need longer consolidation to rebuild confidence. Upper recovery may remain limited until long-term holders return to accumulation patterns。

Turning to the options market, the front-end implied volatility has declined sharply and the bias has normalized, and the options flow now reflects controlled up-front and down-stream swings. Structurally, the market for encrypted options appears to be moving from a crisis to a reconstruction model, indicating improved stability。

However, the next major catalyst is coming, the Fed Conference. The lower interest rates have been largely priced, which means that the dove results are likely to maintain a balance between volatility and bias. On the contrary, if the Federal Reserve provides smaller interest rates or maintains the hawk tone, the short-term implied volatility rate may return to high, and the 25-Delta bias may increase as traders rush back to buy protection. In essence, the current calm in the market is conditional and stable, but fragile if the Fed deviates from expectations。