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 by Glassnode, Bitcoin (BTC) remains within a technically significant zone dominated by short-term holders. Its rebound to nearly $98,000 has helped reduce financial strain across the network.
The report emphasized recent market activity showing increased capital inflows and improved investor sentiment. However, it also cautioned that breaching critical support levels could expose the current price structure to downside risk.
Bitcoin experienced a surge to $97,900 last week, representing its highest point in over two months. This rise temporarily relieved previously underwater positions, bringing over 3 million BTC back into profitability after the price had fallen to around $74,000 in April.
Nevertheless, the market currently faces a decision-making phase, as investors anticipate whether Bitcoin will consolidate above key cost-basis indicators, such as the 111-day moving average and the Short-Term Holder realized price.
The report noted that Bitcoin’s realized cap has reached a record high of $889 billion, marking a 2.1% increase over the past month. This metric, which calculates total capital inflows based on acquisition prices, indicates that more value is flowing into the network.
Short-Term Holders in Focus as ETF Demand Rebounds
Although the volume of coins held at a loss has dropped to 1.9 million BTC, recent buyers still account for a significant share. Glassnode reports that short-term holders (STHs), many of whom bought at prices above $96,000, hold 83% of the coins currently in unrealized loss.
Earlier this year, these investors faced heightened financial stress as their unrealized losses surged to concerning levels. However, that pressure has eased, with the Short-Term Holder (STH) unrealized loss metric returning to a neutral range, suggesting that most of these addresses are now nearing breakeven.
This shift has altered spending patterns, with short-term holders (STHs) now realizing profits more frequently than 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.
Investor activity has generally increased, with combined realized profit and loss volumes rising to $1 billion per day—a threshold surpassed during only 15% of trading sessions in the current market cycle.
Analysts interpret the increase as a sign of renewed market participation; however, the report cautioned that much of this behavior may still stem from short-term price fluctuations rather than long-term investor confidence.
Institutional interest, which had declined in recent months, is now appearing to experience a resurgence. Over the past two weeks, U.S. spot Bitcoin exchange-traded funds (ETFs) have absorbed more than $4.6 billion in inflows, effectively offsetting the earlier market downturn that saw net outflows of 70,000 BTC.
Potential Undervaluation of Market Volatility
Although the market has rallied and capital flows have renewed, expectations for volatility in the derivatives markets continue to decline. One-week and one-month at-the-money implied volatility levels have dropped to their lowest point since July 2024, and longer-duration contracts are showing similar reductions.
Implied volatility premiums on contracts expiring between May and March 2026 have declined, as even long-term options reflect reduced expectations for major price fluctuations.
The report interpreted this low-volatility environment as a possible counter-indicator, especially given the market’s proximity to densely concentrated cost-basis zones between $94,000 and $96,000. The Realized Supply Density metric, which measures the volume of BTC acquired near current price levels, has also shown a notable rise.
This clustering suggests that even minor price movements could significantly influence investor behavior, particularly among those who bought 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.
