Bitcoin recovers, but still appears on the market with short-term holders near the break-even point

According to May 7, Bitcoin (BTC) relies on technically important zones controlled by short-term holders, despite recovering to nearly $98,000. Report By GlassNode.

The report highlights recent market behavior pointing to capital inflows and improved investor sentiment. Additionally, they warned that if the main support level fails, the current price structure will remain vulnerable.

Bitcoin surged to $97,900 last week, hitting its highest level for two months. The move temporarily eased the underwater position, reverting over 3 million BTC to profitable state after a revision of about $74,000 in April.

However, the market is in the decision-making phase as we wait to see if Bitcoin can integrate key cost base levels, such as the 111-day moving average and the realized price of short-term holders.

The report noted that recent rally has pushed the Bitcoin realization cap to an all-time high of $889 billion, up 2.1% in the past month. Realization cap is a metric that measures cumulative capital inflows based on the acquisition price, suggesting that more value is in the network.

At the same time, realised profits exceed $1 billion per day, indicating strong demand that can absorb recent profit-taking activities from buyers.

According to Cryptoslate data, Bitcoin is trading at $96,844 as of press time, an increase of 2.64% over the past 24 hours.

As ETF demand recovers, keys for short-term holders

The number of coins held in losses has dropped to 1.9 million BTC, but buyers these days still represent the majority of those holdings. GlassNode reported that short-term holders (STH) concentrated 83% of coins on unrealized losses, many of which entered the market over $96,000.

These investors were previously exposed to rising stress, but earlier this year, unrealized losses violated a surprising level. That stress has since subsided, with the STH unrealized loss metric returning to the neutral region, suggesting that most of these addresses are close to break-even.

This transition also affects spending behavior, with STH increasingly recognizing profits rather than losses. The report suggests that this shift could mark pivot points, indicating that the cohort is regaining confidence and selectively regaining risk.

Investor activities are also widely covered. The total amount of realised profits and losses reached $1 billion per day. This level is only exceeded for 15% of the trading sessions in this cycle.

The rise indicates an updated market involvement, but the report warned that much of this action could be responsive to short-term price movements rather than driven by long-term convictions.

The institutional benefits that have been declining over the past few months seem to be rebounding. The US Spot Bitcoin Exchange-Traded Funds (ETFs) have absorbed more than $4.6 billion inflows over the past two weeks, offsetting 70,000 BTC with net spills recorded during the previous drawdown.

Managed assets within US ETFs currently stand at 1.71 million btc, reaching an all-time high of 11,000 btc earlier this year.

The recovery in ETF demand is a constructive signal that institutional allocators are beginning to spin capital into Bitcoin again after a period of attention, according to the report. The inflow coincides with the broader increase in market liquidity and capital deployment observed on-chain.

Potentially low-cost volatility

Despite the rally and renewed capital movements, volatility expectations in the derivatives market are declining. The implied volatility of one week and one month at the money is at its lowest since July 2024, with long-term contracts showing similar compression.

All implicit volatility premiums for contracts that expire between May 2026 and March 2026 have gone downwards, with even long-term options being priced relatively low price forecasts.

The report viewed this modest volatility regime as a potential anti-metric, especially given the market approaching a dense cost-based cluster of $94,000 to $96,000. The realized supply density metric, which measures the amount of BTC acquired near current prices, has increased significantly.

This concentration means that even small price fluctuations can affect investor behavior, especially among those who purchased within the combined December-February range.

Recent gatherings have improved profitability and market structure across the network, but further profits are not guaranteed due to Bitcoin’s position close to critical support and resistance levels. If BTC cannot maintain average travel beyond the short-term cost base, test the current market strength.

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