Briefing
The Bitcoin market has entered a critical structural reset, confirmed by the price falling decisively below the average acquisition cost of recent investors. This move suggests a market-wide shift to risk-aversion, forcing new buyers into loss and clearing out excessive leverage, which is also reflected in declining derivatives activity. The most important data point is the breach of the Short-Term Holder Cost Basis, which stood near $109,500, indicating a necessary cleanout of short-term speculative positions.
Context
The primary question for the market is whether the recent price decline is just a healthy correction or the start of a deeper, more structural bear phase. Investors are wondering if the recent demand was weak and if the market has cleared enough speculative excess to establish a sustainable bottom. This data helps answer that by measuring the conviction and financial state of the most recent market participants.
Analysis
The Short-Term Holder (STH) Cost Basis is the average price at which all Bitcoin that last moved in the past 155 days was acquired. It acts as a critical psychological and structural support level because when the price falls below it, the majority of recent buyers are underwater. The observed pattern is a decisive drop below this $109,500 level, which means short-term speculators are now holding unrealized losses.
Historically, this breach signals a market reset, as these investors face pressure to sell, clearing out weak demand and setting the stage for long-term holders to re-accumulate at lower prices. This on-chain signal is reinforced by a collapse in derivatives funding rates, confirming a significant reduction in market leverage.
Parameters
- Short-Term Holder Cost Basis Breach → Price dropped below the $109,500 average purchase price for coins moved in the last 155 days.
- 1-Standard Deviation Band Breach → Price fell below the $95,400 band, confirming the loss territory for recent buying pressure.
- Funding Rate Trend → Perpetual futures funding rates have declined to periodic lows, signaling a significant reduction in market-wide leverage.
- Options Skew → Options market skew is negative (put-centric), confirming a strong preference for downside protection and hedging.
Outlook
This structural reset suggests the market will likely consolidate around a new, lower demand floor as recent sellers are flushed out. The near-term outlook is cautious, with price action likely capped by the former STH Cost Basis, which now acts as a key resistance level. A key confirming signal to watch is a continued collapse in Open Interest, which would confirm that the market is fully de-risking and preparing for a cleaner rebound with a solid foundation.
Verdict
The breach of the short-term holder cost basis confirms a structural market reset is underway, clearing excessive leverage and demanding a new, lower price floor.
