Bitcoin is once again at a crucial juncture as the market continues to grapple with significant selling pressure. After dipping below the $115,000 mark earlier this week, BTC is now striving to maintain the $110,000 level, which many investors regard as essential for near-term stability. This steep decline has undermined confidence, with traders increasingly worried about a deeper correction if support fails.
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Market sentiment has rapidly shifted from bullish enthusiasm to caution, as volatility increases and momentum wanes. The larger cryptocurrency market has echoed Bitcoin’s volatility, with altcoins experiencing marked declines. This period of consolidation and retracement has left traders uncertain, unsure if the recent plunge is merely a temporary setback or the start of a more significant corrective phase.
Amid this turbulence, top analyst Darkfost pointed out a significant on-chain signal: it has been another challenging day for short-term holders (STHs). Data indicates that STHs realized losses of approximately 30,000 BTC in just one day. For many recent buyers, unrealized gains have vanished, forcing some to sell at substantial losses.
Bitcoin STH Face Losses, But Market Outlook Holds
Darkfost’s latest analysis underscores the growing pressure on Bitcoin’s short-term holders (STHs). With BTC trading around $111,400, the majority of their unrealized profits have been nearly erased, leaving the newest market entrants wrestling with realized losses. Data shows that STHs collectively incurred estimated losses of 30,000 BTC in a single day, highlighting the magnitude of the recent correction. For traders, this has been painful, but Darkfost contends it is ultimately constructive for the short-term outlook.
He explains that when STHs capitulate, it often serves as a cleansing event for the market. Excessive leverage is eliminated, weak hands exit their positions, and the supply overhang lessens. While “annoying in the very, very short term,” as Darkfost puts it, such resets typically establish a stronger foundation for the next upward movement. This trend has been evident in past cycles, where brief phases of realized losses paved the way for sustained rallies once selling pressure eased.
On a macro level, conditions remain difficult as global markets adjust to tighter liquidity and slower economic growth. Nevertheless, many analysts feel Bitcoin is well-positioned for the long run, especially as institutional adoption and regulatory clarity advance. They believe the current volatility may just be a step towards a healthier and more robust market structure.
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Price Analysis: Testing Support After Breakdown
Bitcoin’s price trajectory reveals clear weakness following the loss of the $115K level, with the chart now testing support near $113K. This breakdown occurs as the bullish momentum that fueled earlier rallies fades, rendering BTC susceptible to volatility. Currently, the price trades below the 50-day moving average, indicating pressure in the short term. The 100-day SMA around $113,337 is acting as a crucial support level, and maintaining this will be vital to prevent a more severe correction.
The recent drop emphasizes a rejection near the $123K resistance zone, where the market struggled to achieve sustained momentum. Should Bitcoin manage to stay above the $113K range, consolidation might follow before another recovery attempt. However, a decisive fall below this level could lead BTC to the $110K psychological barrier, where buyers are expected to step in.
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Momentum indicators suggest that the market remains in a corrective phase rather than a complete reversal, with higher lows still in place from June levels. As long as BTC manages to avoid a drop below $110K, the broader bullish framework remains intact. Traders will be closely monitoring whether Bitcoin can stabilize above its current support or if further selling pressure from long-term holders and wider market uncertainty pushes it lower.
Featured image from Dall-E, chart from TradingView
