Close attention is being paid by traders to determine whether key cost-basis levels and the Short-Term Holder realized price can be maintained by Bitcoin through consolidation.
According to a May 7 report published by Glassnode, Bitcoin (BTC) is still positioned within a technically significant zone influenced by short-term holders, even after its rebound to nearly $98,000, which has contributed to the reduction of financial strain across the network.
Recent market activity indicating enhanced capital inflows and improved investor sentiment was emphasized in the report. However, a caution was also issued that the existing price structure may be exposed to downside risk should critical support levels be breached.
Bitcoin experienced a surge to $97,900 last week, representing its highest point in over two months. This rise temporarily relieved previously underwater positions, with over 3 million BTC being brought back into profitability following a decline to approximately $74,000 in April.
Nevertheless, the market is regarded as being in a decision-making phase, with anticipation surrounding whether Bitcoin will be able to establish consolidation above critical cost-basis indicators, including the 111-day moving average and the Short-Term Holder realized price.
It was noted in the report that Bitcoin’s realized cap has been elevated to a record peak of $889 billion, reflecting a 2.1% increase over the past month. As a metric that calculates total capital inflows based on the acquisition price, realized cap suggests that a greater amount of value is being introduced into the network.
Short-Term Holders in Focus as ETF Demand Rebounds
Although the volume of coins held at a loss has declined to 1.9 million BTC, a significant portion of these holdings is still attributed to recent buyers. According to Glassnode, 83% of the coins in unrealized loss are concentrated among short-term holders (STHs), many of whom entered the market at prices exceeding $96,000.
Earlier this year, these investors had been subjected to heightened financial stress, as unrealized losses reached concerning levels. However, that pressure has since been alleviated, with the Short-Term Holder (STH) unrealized loss metric returning to a neutral range, indicating that the majority of these addresses are now approaching breakeven status.
This shift has been reflected in altered spending patterns, as short-term holders (STHs) are now more frequently realizing profits instead of incurring losses. As noted in the report, this behavioral change may signify a turning point, suggesting that the group is gradually regaining confidence and engaging in selective de-risking.
A general increase in investor activity has been observed, with combined realized profit and loss volumes rising to $1 billion per day— a threshold surpassed during only 15% of trading sessions within the current market cycle.
The increase has been interpreted as a sign of renewed market participation; however, caution was expressed in the report, noting that a significant portion of this behavior may still be influenced by short-term price fluctuations rather than motivated by long-term confidence.
Institutional interest, which had declined in recent months, is now appearing to experience a resurgence. Over the past two weeks, more than $4.6 billion in inflows have been absorbed by U.S. spot Bitcoin exchange-traded funds (ETFs), effectively counterbalancing the net outflows of 70,000 BTC observed during the earlier market downturn.
Potential Undervaluation of Market Volatility
Although the market rally and renewed capital flows have been observed, expectations for volatility within derivatives markets are on the decline. One-week and one-month at-the-money implied volatility levels have reached their lowest point since July 2024, with comparable reductions being reflected in longer-duration contracts.
Downward trends have been observed in implied volatility premiums on contracts set to expire between May and March 2026, with even long-term options reflecting subdued expectations for significant price fluctuations.
This low-volatility environment was interpreted in the report as a possible counter-indicator, particularly due to the market’s closeness to heavily concentrated cost-basis zones ranging from $94,000 to $96,000. A notable rise has been recorded in the Realized Supply Density metric, which gauges the volume of BTC acquired near prevailing price levels.
This clustering suggests that minor price movements could result in magnified impacts on investor actions, especially among those whose purchases were made during the December–February consolidation phase.
Although the recent rally has enhanced overall network profitability and market structure, Bitcoin’s proximity to key support and resistance levels indicates that continued upward momentum cannot be assured. The resilience of the current market will be tested if BTC is unable to maintain levels above its short-term cost basis and moving averages.
