Bitcoin’s $116K Rebound Teeters on Edge as Glassnode Flags ’Fragile Zone’

Bitcoin's latest surge past $116K isn't winning any confidence awards—Glassnode just slapped a 'handle with care' label on the rally.

The fragile frontier

Market wizards at the analytics firm warn BTC's current foothold looks more like a tightrope walk than solid ground. The coin's clinging to gains like a trader clinging to hopium after a 20% drop.

Institutional déjà vu

Same pattern, different cycle: whales are accumulating while retail FOMO still hasn't hit 2021-levels. Classic case of 'smart money buys the dip, dumb money buys the top'—but hey, at least the suits are consistent.

One cynical take? This fragile zone might just be Wall Street's way of shaking out weak hands before the next leg up. Because nothing says 'healthy market' like psychological warfare over digital scarcity.

In Brief

• Bitcoin enters thin liquidity gap, facing resistance near $116,900 amid slowdown.
• Short-term holder profitability slips to 70%, signaling cooling but steady sentiment.
• Cost basis at $106K remains supportive, aligning with historical bull market patterns.

Liquidity Gap and Emerging Resistance

More notably, the pullback has pushed BTC into a thinly traded “air gap” between $110,000 and $116,000, an area where few coins have historically changed hands. This lack of liquidity leaves the market vulnerable to sharper swings, yet it may also present accumulation opportunities for patient buyers.

According to Glassnode data, the decline from the all-time high has left many new investors holding coins purchased above $116,000. This cluster of supply has become a significant overhead barrier. 

Attempts to reclaim it have so far failed, with $116,900 now acting as a decisive resistance level. Unless demand strengthens enough to break this threshold, Bitcoin risks drifting toward the lower bound of the gap near $110,000.

Still, some buyers have stepped in. Data from late July to early August shows roughly 120,000 BTC acquired after the drop to $112,000. 

This rebound pushed prices beyond $114,000, indicating restrained buy-the-dip activities. The turnover in this price range is, however, quite thin, so very active buying WOULD be essential to develop a solid foundation to take the next step up.

Investor Sentiment and Profitability Shifts

Short-term holder (STH) profitability has cooled from 100% to about 70%, a typical mid-line in prior bull runs. While this pullback hasn’t triggered panic selling, confidence could weaken if more coins slip into loss. Interestingly, the share of STH coins being sold for profit has dropped to 45%, below neutral levels, suggesting a balanced market mood.

Additionally, the short-term holder cost basis remains at $106,000, comfortably below the current price. Historically, holding above this line has aligned with continued bull market conditions, even after sharp corrections.

Bitcoin ETF Outflows and Futures Cooling

Extraneous demand signals indicate a degree of weakness. On August 5, BTC ETFs recorded a netted outflow of 1,500 BTC, which was the largest since April. Despite these instances being relatively short-lived, prolonged withdrawals may indicate a larger change of sentiment.

Less enthusiasm is also evident in futures markets. In perpetual swaps, funding rates have dropped below 0.1%, meaning that the bulls are less eager to pay a premium on leverage. This indicates a more conservative approach by speculative traders in the short run.

As a result, bitcoin is at a critical juncture. Recovery of $116,900 might reflect new bullish strength whereas a miss of the same might signal further depreciation toward $110,000.

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