Bitcoin (BTC) recently made headlines by surging close to $98,000 before settling around $96,000, marking a notable 5.5% increase in recent trading sessions. This latest rally has once again brought to the forefront a crucial question for investors and enthusiasts alike: Is this the much-anticipated springboard for a sustained climb beyond the $100,000 psychological barrier, or are we witnessing another fleeting ascent, perhaps fueled by technical positioning and shallow market liquidity?
Analysis from Glassnode offers a nuanced perspective, suggesting that while mechanical forces, such as short covering, largely drove this recent price movement, the broader, more fundamental demand remains inconsistent. Furthermore, the overall market liquidity continues to appear constrained, painting a complex picture for Bitcoin's immediate future.
Navigating the Critical Supply Zone
The current Bitcoin price is nestled within a significant cluster of supply held by long-term investors. This supply was largely accumulated between April and July 2025, forming a formidable price range roughly spanning $93,000 to $110,000. This zone has historically acted as a crucial resistance level.
Glassnode's detailed cost-basis distribution heatmap clearly illustrates this overhead supply. Each time Bitcoin has attempted a rebound since November, it has consistently encountered renewed selling pressure within this area, preventing the price from establishing a durable recovery. This region serves as a pivotal transition barrier, often separating corrective market phases from more robust, sustained bull markets.
An equally important metric is the short-term holder's cost basis, which currently sits at approximately $98,300. This figure represents the average entry price for those who have recently acquired Bitcoin. Historically, reclaiming and maintaining a price above this specific threshold has often signaled a shift from a corrective trend into a more enduring upward trajectory. For confidence to be fully restored and for a foundation for sustained momentum to be laid, Bitcoin's price absolutely needs to consolidate above this $98,300 mark.
Observing the behavior of long-term holders provides additional context regarding the amount of overhead supply the market needs to absorb. While these seasoned investors continue to be net sellers, their rate of distribution has significantly slowed down compared to the aggressive profit-taking observed throughout the second half of 2025. Glassnode reports that long-term holders are currently realizing about 12,800 BTC per week in net profit. This is a substantial decrease from cycle peaks where weekly profit realization exceeded 100,000 BTC. This moderation suggests that while profit-taking is still active, it is far less intense than during previous major distribution phases.
Institutional Flows Stabilize, Spot Markets Improve
On a more positive note, institutional balance sheet flows appear to have completed a full reset. After an extended period of outflows across various channels, including spot ETFs, corporate treasuries, and even sovereign entities, net flows have stabilized. Notably, spot Bitcoin ETFs have turned positive, re-establishing their role as a primary marginal buyer in the market.
- Bitcoin ETFs registered an impressive $1.5 billion in net inflows for January, with nearly $1.6 billion specifically recorded between January 13 and 14, according to Farside Investors data.
The behavior within spot markets has also become more constructive. Cumulative Volume Delta (CVD) measures for both Binance and aggregate exchanges have shifted back into a buy-dominant regime. This indicates a clear move away from the persistent sell-side pressure that characterized earlier periods. Even Coinbase, which had been a consistent source of selling during consolidation phases, has significantly reduced its distribution activity.
While spot market participation is not yet showing the aggressive, sustained accumulation typically seen during full trend expansion phases, this transition back into a net-buying posture represents a positive structural shift for the market.
Mechanical Moves on Thin Volume: The Liquidity Problem
Despite the encouraging signs, the recent push into the $96,000 region was significantly reinforced by mechanical short liquidations, but critically, this occurred on relatively thin derivatives volume. Glassnode points out that futures turnover has remained well below the elevated activity levels seen for most of 2025. This breakout took place within a comparatively light liquidity environment, where even modest shifts in positioning could trigger disproportionately large price responses.
In simpler terms, it did not require a massive influx of new capital to force short sellers out of their positions and propel the price past resistance. This dynamic is directly linked to a broader liquidity challenge evident in order books. Aggregated 2% market depth, a measure of how much capital is needed to move the price by a certain percentage, has reportedly declined by approximately 30% from its 2025 highs, according to data provider Kaiko.
On Binance, specifically, 1% depth exceeded $600 million at its peak in October 2025 but dwindled to below $400 million by December 2025. Thinner order books inherently amplify price swings, making the market tape far more sensitive to large individual flows and strategic positioning. Blockchain data further illustrates this narrative: on December 31, market maker Wintermute net-deposited 1,213 BTC to Binance, with these transfers concentrated during periods of low trading activity. Large exchange deposits occurring during quiet hours carry the inherent risk of creating outsized impacts on the tape, especially when order books lack sufficient depth.
However, it is important to place the narrative of manipulation into context. A widely circulated claim on December 30 alleged "multi-billion dollar manipulation," yet the on-chain transfers referenced in this claim amounted to less than $30 million. A more accurate explanation for sharp intraday price movements is likely a combination of structural market fragility and stop-hunting strategies, rather than concrete evidence of coordinated, large-scale schemes.
$100,000: A Mechanical Attractor
The $100,000 price level holds significant importance because it represents a convergence point where various market forces align: average cost basis, options exposure, and dealer hedging strategies. Coin Metrics highlights that call open interest, representing contracts to buy Bitcoin, is heavily clustered around the $100,000 strike price for late-January expiries.
Deribit options open interest clearly shows the largest concentration of call contracts gathered at the $100,000 strike price for the January 30, 2026, expiration. Glassnode further reports that dealers are in a "short gamma" position between approximately $95,000 and $104,000. This short gamma exposure means that as prices rise, dealers must buy spot or futures to hedge their positions, thereby reinforcing the upward price movement. In such an environment, hedging flows no longer act as a dampener to price changes; instead, they amplify them, creating a fragile stability.
Volatility might remain low while the price stays within a defined range, but once momentum begins to build, price movements are more likely to accelerate rather than dissipate. With Bitcoin currently trading around the $95,000 to $96,000 area, it has entered this short gamma zone. This implies that sustained buying action, supported by genuine volume, is more likely to trigger these directional hedging flows, potentially pushing the price higher.
Options market behavior around the $100,000 strike further underscores conditional upside expectations. For short to mid-term maturities, typically up to three months, the premium paid for call options has significantly exceeded the premium received from selling them. This indicates active demand for near-dated upside exposure. Conversely, longer-dated maturities exhibit the opposite behavior: richer call premiums further out on the curve were utilized as opportunities to sell upside. This divergence suggests that the market is positioning for a potential retest of the $100,000 area in the near term, while simultaneously expressing reservations about sustained acceptance above that level over longer time horizons.
Volatility Deferred, Not Resolved
Despite these dynamics, implied volatility across the curve remains relatively low, with Deribit's DVOL reading hovering around the 40s. However, this seemingly calm reading might be masking underlying fragilities. Market skew continues to price in potential downside risk, with the 25-delta skew remaining biased towards put options, particularly in the mid and longer maturities. This indicates a market that is comfortable holding exposure but is unwilling to do so without some form of insurance against potential drops.
The simultaneous existence of low implied volatility and negative skew highlights a significant tension. Market participants are not actively positioning for an immediate downturn, yet they are consistently willing to pay for asymmetric protection against it. Volatility gradually increases with maturity, suggesting that uncertainty is more attributed to the passage of time rather than to any specific near-term catalyst. This is consistent with a market that anticipates short-term stability but remains exposed to latent, underlying risks.
The $100,000 Test: Conditions for Sustainability
For Bitcoin to genuinely embark on a sustained move above $100,000, two critical conditions must align. Firstly, the price needs to reclaim and firmly hold above the $98,300 short-term holder cost basis. This would put recent buyers back into a profitable position, thereby reducing their incentive to sell into subsequent rallies. Secondly, market liquidity and overall flows need to improve concurrently. While continued positive ETF inflows provide one positive signal, a more crucial factor is the stabilization and increase of market depth.
If the current regime of Binance's 1% depth remaining below $400 million persists, the market will continue to be highly susceptible to volatile whipsaws. The good news is that profit-taking activity has cooled, distribution pressure from long-term holders has eased, and classic late-cycle euphoria metrics are not yet flashing red. However, the fragility of market liquidity introduces a significant wildcard. Order books are noticeably thinner than they were at their October highs, meaning that even moderately large flows during periods of low activity can still generate disproportionately large price movements on the trading tape.
The $100,000 level is more than just a psychological benchmark; it is a point where multiple structural forces converge, including cost basis levels, options market exposure, and dealer hedging activities. This confluence makes it a natural magnet if market conditions were to stabilize. Whether Bitcoin can reclaim and maintain its position above $100,000 will depend less on speculative narratives and more on the market's ability to rebuild its depth while simultaneously sustaining positive capital flows. While indicators are showing some green, distribution pressure has lessened, and institutional demand is stabilizing, the underlying mechanics remain fragile. The recent upward movement occurred on relatively thin volume, predominantly supported by mechanical short covering. This accurately describes the current state of play: modest capital can indeed generate significant price movements, but true sustainability will require a much deeper and broader accumulation of capital to follow.
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