BTC Gains Ease as Market Participants Hedge Positions

Bitcoin Pauses as Traders Rotate Into Derivatives

After months of strong gains, Bitcoin (BTC) has slowed, trading above $111,000 Friday afternoon (Hong Kong time), up about 2% over the past week. The pullback from recent highs above $126,000 reflects faltering momentum, with long-term holders selling into strength and traders shifting toward defensive derivatives positions.

Spot Market Pressure

Glassnode reports repeated dips below key cost-basis levels, signaling market exhaustion, while CryptoQuant notes shrinking realized profits and rising exchange inflows. Analysts see capital staying in crypto but rotating from spot and ETFs into futures and options, making volatility the main traded asset.

Short-term holders’ cost basis near $113,000 is critical; falling below this level indicates recent buyers are sitting on losses, eroding confidence and pressuring weaker hands.

Long-Term Holder Selling

Since July, long-term holders have sold over 22,000 BTC per day, further weighing on momentum. Failure to reclaim $113,000 could push losses toward $108,000–$97,000, historically unprofitable zones for 15%–25% of BTC supply.

Derivatives Hedging

ETF inflows have cooled and exchange reserves are rising. Options markets show record-high open interest and growing put demand. Market makers’ hedging—selling into rallies and buying dips—has capped price action, keeping the market largely delta-neutral.

Outlook

Bitcoin is in a rotation and consolidation phase, not a collapse. Recovery will likely require renewed spot demand, calmer derivatives activity, and potential macro catalysts like Fed rate cuts or revived ETF inflows. For now, BTC is catching its breath while volatility remains the market’s focus.