Bitcoin (BTC) has entered a crucial technical zone primarily governed by short-term holders, despite its recent recovery to nearly $98,000, alleviating financial pressure within the network, as outlined in a report by Glassnode on May 7.
The report emphasized improved market behavior indicating enhanced capital inflows and investor sentiment. However, it also cautioned that the current price structure remains susceptible if essential support levels falter.
After surging to $97,900 last week, Bitcoin reached its highest level in over two months, resulting in more than 3 million BTC returning to a profitable state following a drop to around $74,000 in April.
Despite this recovery, the market is currently at a crossroads, waiting to see if Bitcoin can consolidate above critical cost-basis levels such as the 111-day moving average and the Short-Term Holder realized price.
The report also highlighted that the recent rally propelled Bitcoin’s realized cap to a record high of $889 billion, marking a 2.1% increase over the past month. Realized cap measures cumulative capital inflows based on acquisition price, indicating a rise in network value.
Furthermore, daily realized profits have exceeded $1 billion, showcasing robust demand capable of absorbing profits from recent buyers.
As per CryptoSlate data, Bitcoin is currently trading at $96,844, reflecting a 2.64% increase over the past 24 hours.
Significance of Short-Term Holders in ETF Demand Recovery
While the number of coins held at a loss has decreased to 1.9 million BTC, a majority of these holdings still belong to recent buyers. Short-term holders (STHs) hold 83% of coins in unrealized loss, many of whom entered the market above $96,000.
Previously under stress due to high unrealized losses, STHs have seen a reduction in this metric, suggesting that most addresses are now closer to breaking even.
This shift in sentiment has influenced spending patterns, with STHs increasingly realizing gains rather than losses, indicating a return in confidence and a cautious approach to risk management.
Overall investor activity has increased, with combined realized profit and loss volumes hitting $1 billion per day, a level only surpassed during 15% of trading sessions in this cycle.
Institutional interest, which had dwindled recently, is showing signs of revival, with US spot Bitcoin exchange-traded funds (ETFs) witnessing over $4.6 billion in inflows in the last two weeks, offsetting previous net outflows.
Total assets under management in US ETFs now stand at 1.171 million BTC, just 11,000 BTC shy of the earlier all-time high this year, indicating a positive shift in institutional capital allocation towards Bitcoin.
The recovery in ETF demand aligns with increased market liquidity and capital deployment observed on-chain.
Underestimation of Volatility
Despite the recent rally and capital movements, volatility expectations in derivatives markets are on the decline. Implied volatility for short and long-term contracts is at its lowest since July 2024, with dwindling expectations for price swings.
This subdued volatility regime, coupled with the concentration of Realized Supply Density near the current price, suggests that even minor price fluctuations could have significant effects on investor behavior, particularly among those who entered the market during the consolidation phase from December to February.
While the recent rally has improved overall network profitability and market structure, Bitcoin’s proximity to crucial support and resistance levels indicates that further gains are not guaranteed. The market’s resilience will be tested if BTC fails to maintain levels above its short-term cost basis and moving averages.
Bitcoin Market Data
As of the latest update on May. 7, 2025, Bitcoin holds the top position by market cap, with a 2.46% increase in price over the last 24 hours. Its market capitalization stands at $1.92 trillion, with a 24-hour trading volume of $72.38 billion. For more information on Bitcoin, visit the platform.
Crypto Market Summary
At the same update time, the total crypto market valuation is $2.99 trillion, with a 24-hour volume of $121.48 billion. Bitcoin dominance is currently at 64.45%. Explore further insights into the crypto market.
