Bitcoin’s Make-or-Break Moment: Short-Term Holder Cost Basis Becomes Critical Battleground

Bitcoin stares down its most significant technical test in months as price action converges with short-term holder cost basis—the level where recent buyers break even or face losses.

The Psychology of Pain Thresholds

When Bitcoin trades near this crucial metric, market sentiment becomes dangerously polarized. Short-term holders either double down or capitulate entirely—creating volatility spikes that ripple across the entire crypto ecosystem.

Technical Breakdown or Breakthrough?

Historical data shows this level often serves as either springboard for rallies or trap door for corrections. The current standoff represents more than just numbers on a chart—it's a psychological war between fear and greed playing out in real-time.

Meanwhile, traditional finance analysts continue watching from the sidelines, still trying to figure out why people would trust code more than central bankers who've perfected the art of printing their way out of problems.

• Bitcoin trades below short-term holder cost basis; 15% of supply now at a loss.
• Key supports: $113.1K, $108.6K, and $97.5K if weakness continues.
• Long-term holders’ daily selling doubled since July 2025.
• Despite a 6% rebound, options traders stay defensive as volatility hits 48.

Trading NEAR the short-term holder cost basis represents a critical phase for Bitcoin’s cycle. When the asset falls below this level after reaching new highs, it typically drives the percentage of supply in profit down to roughly.

That means more than 15% of all Bitcoin now sits at a loss, signaling that weaker hands may soon capitulate. This is the third instance in the current cycle where Bitcoin has dropped below this threshold. 

If it fails to reclaim the $113.1K level soon, the next key support lies around $108.6K, where 15% of supply is held at a loss, and further weakness could drag prices toward $97.5K.

Such a move WOULD deepen losses for newer investors and further test market resilience. 

Long-term holder behavior supports this cautious view. Since July 2025, their daily spending volume has more than doubled, from around 10,000 BTC to over 22,000 BTC per day.

This consistent selling pressure from experienced investors suggests they are securing profits while the broader market shows signs of fatigue.

Traders Shun Calls Despite Bitcoin’s 6% Rebound

The options market mirrors the same defense mentality. Open interest has hit new records as derivatives are increasingly deployed as a means of hedging exposure, rather than selling spot positions.

Implied volatility soared to 48, from the 40-odd level of some two weeks ago, evidence of an obvious shift towards the more reactive mode.

Keep demand elevated, and the price of trading the downside safety net higher premiums. The 1-month volatility risk premium went negative, bringing an end to the quiet market regime that had made the short-vol trades pay.

Even with the recent 6% run, from $107.5K to $113.9K, little interest was expressed by the market for calls, where, wherever, increasing purchases continued.