Bitcoin is starting to recover from its recent selloff, surpassing $90,000 for the first time in a week as market conditions gradually improve.
But despite the new optimism, one major investor group continues to fuel concerns over liquidity. This lingering pressure is preventing Bitcoin from re-establishing a fully stable uptrend.
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Bitcoin holders may pose a threat
Liquidity trends, measured through realized gains and losses, provide important insight into the long-term health of the market. The realized profit/loss ratio for long-term holders (LTH) is still above 100x, indicating that long-term holders are still realizing gains rather than losses.
This suggests that liquidity remains healthy compared to the large bottom formation and stressful market conditions in Q1 2022. As long as LTH continues to realize gains, Bitcoin will maintain a layer of structural support.
However, things can change quickly. As liquidity declines and the ratio compresses below 10x, it becomes difficult to eliminate the risk of a deeper bear market.
Historically, that threshold has coincided with moments of severe stress among long-term holders. If LTH begins to realize losses, it would signal deterioration in market confidence and a possible reversal in price momentum.
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Macro momentum indicators are also showing signs that market stress is easing. Recent patterns reflect a clear mean reversion, suggesting that the volatility sellers are returning. Still, implied volatility remains high compared to actual market performance.
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One-month implied volatility has declined, down about 20 volume points from last week’s peak and about 10 points from recent levels, indicating that some of the stress premium is now easing, according to Glassnode data.
Decreasing implied volatility and moderating put skew indicate reduced demand for immediate downside protection. This means that short-term concerns have faded, although Bitcoin remains vulnerable to sudden fluctuations.
BTC Price Still Needs to Test Important Support
Bitcoin is trading at $91,366, firmly above the $89,800 support level after rising above $90,000 for the first time in seven days. The crypto tycoon currently faces resistance at $91,521, which is a key barrier that will determine the next stage of the recovery.
As long-term holders begin to realize losses, volatility increases and the rebound could be derailed. In this scenario, Bitcoin could fall below $90,000 and potentially fall towards $86,822 or $85,204 in the short term.
Bitcoin should be protected from further declines if long-term holders continue to realize gains and traders remain bullish.
This resilience could help reignite bullish momentum and allow BTC to break above $91,521 and target $95,000. Crossing this psychological zone opens the way to $98,000 and potentially the $100,000 mark.
