The price of Bitcoin has seen a significant drop today, falling 8% to a multi-week low, as concerns about the state of the bull market emerge.
Recent insights from Glassnode highlight several risk factors that could lead to continued bearish momentum for Bitcoin in the near term.
Weakening Market Conditions
In its latest analysis, Glassnode outlined several risk factors contributing to the current market downturn. These include declining capital inflows, with a noticeable slowdown in investment into Bitcoin.
Additionally, it observed mixed institutional Bitcoin ETF flows. For consecutive weeks, Bitcoin ETFs have recorded outflows. The close of business yesterday saw one of the largest outflows on record, with the market draining $516 million. Meanwhile, as of the start of this month, there were inflows of $340 million.
Pressure on Bitcoin Short-Term Holders
Glassnode also noted that Bitcoin’s Short-Term Holder (STH) cost basis has fallen to $92.5K. This level has often served as a dividing line between bull and bear phases in the market.
Additionally, the STH market value to realized value (MVRV) now stands at 0.96, a dip from around 1.0 as of yesterday. This indicates that short-term holders of Bitcoin are, on average, sitting on a 4% paper loss.
Typically, weaker hands may capitulate when MVRV drops below 1.0, amplifying sell-offs. Essentially, if Bitcoin fails to reclaim the $92.5K level soon, it could lead to further sell-offs as these short-term holders attempt to minimize their losses.
More Downside Risk and Key Support Levels
Furthermore, Glassnode’s analysis highlighted that historical trends suggest Bitcoin may continue to struggle, potentially extending its decline toward levels seen in previous corrections.
Specifically, past post-ATH corrections have pushed Bitcoin prices to -1σ (one standard deviation) below the short-term holder cost basis. This puts the next potential support levels around $71K-$72K.
Glassnode suggests this level could be a critical range to watch for a possible rebound or further selling pressure.
$BTC Cost Basis Distribution shows that the last substantial demand zone appears around $89K-$87K. Below this, there are relatively few investors with cost bases until $71K-$72K (-1σ below STH cost basis). This could mean weaker support in this range, giving bears more control. pic.twitter.com/Ro2I8gjY4q
— glassnode (@glassnode) February 25, 2025
Meanwhile, it noted that Bitcoin’s Cost Basis Distribution reveals that the last substantial demand zone is between $89K and $87K. In other words, this is the level at which many investors bought BTC.
A dip below this range spells trouble as relatively fewer investors bought in at these levels, leaving $71K-$72K as the next major support zone. This lack of support gives bears more control over the market.
Ultimately, the risk of a drop to $71K reduces if Bitcoin reclaims the critical $92.5K level. At press time, Bitcoin is trading at $86,703, showing no signs of a rebound yet and creating lower lows.
