Bitcoin’s price has rebounded, but on-chain data suggests a significant hurdle lies ahead. After dipping below $108,800 on Tuesday, BTC rallied to $112,800, fueled by positive market sentiment driven by a record-high S&P 500 and strong Nvidia earnings. However, this upward momentum faces a critical test.
On-Chain Resistance
Glassnode’s on-chain analysis reveals a potential roadblock. Investors who purchased Bitcoin within the last one and three months are currently underwater, with average cost bases of $115,600 and $113,600 respectively. This creates selling pressure as these short-term holders may look to break even on any price rebound.
Mixed Signals from the Market
Spot market flows paint a challenging picture for the bulls, with neutral demand and bearish perpetuals. The current funding rate of ~0.01% indicates a fragile neutrality. A break above $112,400 with significant volume could open the path to $114,000 – $116,000.
Institutional Demand Offers Hope
However, there’s a silver lining. ETF inflows and corporate adoption of BTC continue to absorb a significant portion of the supply. Over the past day, Bitcoin ETFs saw inflows of $81 million, while Ether ETFs registered $307 million. This institutional demand, combined with corporate purchases, is absorbing approximately 3,600 BTC per day—four times the daily miner issuance.
Metaplanet’s recent announcement to raise $881 million to purchase an additional $837 million worth of BTC in September–October, further bolsters this positive narrative. Their planned acquisition would significantly reduce available supply.
Key Support Level to Watch
Should Bitcoin reverse course, the crucial support level to watch is $107,000, which aligns with the six-month cost basis. A sustained drop below this level could trigger a wave of selling from longer-term holders, potentially accelerating a more substantial decline.
The interplay between short-term selling pressure and long-term institutional demand creates a complex dynamic for Bitcoin’s price trajectory. What do you think will happen next? Share your insights in the comments below.
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