Bitcoin Rebound Holds $116K but Faces Fragile Zone, Warns Glassnode

Bitcoin’s record-breaking rally above $123,000 in mid-July has given way to a choppy and uncertain phase. The price has slipped to $116,191 as of press time, showing minimal change over the past 24 hours but up 0.65% over the week.

Liquidity Gap and Emerging Resistance

The recent 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, but it may also present accumulation opportunities for patient buyers. According to Glassnode data, many new investors are now holding coins purchased above $116,000. This cluster of supply has become a significant overhead barrier. Attempts to reclaim this level have so far failed, with $116,900 now acting as a decisive resistance point. Unless demand strengthens enough to break this threshold, Bitcoin risks drifting toward the lower bound of the gap near $110,000. Despite this, 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 activity. However, turnover in this price range remains thin, so very active buying would be essential to build a solid foundation for the next upward move.

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 some weakness. On August 5, BTC ETFs recorded a net outflow of 1,500 BTC, the largest since April. While these outflows have been relatively short-lived, prolonged withdrawals may indicate a larger shift in sentiment. Less enthusiasm is also evident in futures markets. In perpetual swaps, funding rates have dropped below 0.1%, meaning bulls are less eager to pay a premium on leverage. This indicates a more conservative approach by speculative traders in the short term.

Outlook

Bitcoin is currently at a critical juncture. Recovery above $116,900 might reflect renewed bullish strength, whereas failure to reclaim this level could signal further depreciation toward $110,000.

Frequently Asked Questions (FAQ)

Bitcoin Price and Market Factors

Q: What is the current trading range for Bitcoin according to the article? A: The article highlights Bitcoin trading around $116,191, with a mention of a "thinly traded 'air gap'" between $110,000 and $116,000. Q: What does Glassnode data suggest about recent Bitcoin buyers? A: Glassnode data indicates that many new investors purchased Bitcoin at prices above $116,000, creating a significant overhead resistance level. Q: What are the key resistance and support levels mentioned for Bitcoin? A: The key resistance level identified is $116,900, with a potential support level around $110,000. Q: How has investor sentiment shifted based on short-term holder profitability? A: Short-term holder profitability has decreased from 100% to approximately 70%, which is a typical mid-range during bull runs. However, confidence might waver if more coins fall into loss. Q: What do Bitcoin ETF outflows and futures market data suggest about current demand? A: Bitcoin ETFs saw a net outflow of 1,500 BTC on August 5th, the largest since April, suggesting potential weakness in demand. Futures markets also show less enthusiasm, with funding rates below 0.1%.

Bitcoin's Future Outlook

Q: What is the critical juncture Bitcoin is currently facing? A: Bitcoin is at a critical juncture where a recovery above $116,900 would signal renewed bullish strength, while a failure to break this level could lead to a decline towards $110,000.

Crypto Market AI's Take

The current market dynamics for Bitcoin, as described, present a classic scenario of price consolidation and the emergence of key resistance levels. This phase often tests the conviction of both new and established investors. At Crypto Market AI, we leverage advanced AI algorithms to navigate such periods, identifying potential accumulation zones and predicting shifts in market sentiment. Our platform's AI trading bots can analyze these technical indicators, alongside broader macroeconomic trends, to execute strategies that aim to capitalize on both upward and downward price movements, managing risk effectively even in volatile markets. For those looking to understand how AI can assist in trading decisions, our insights into AI-driven trading strategies can provide valuable context.

Bitcoin Rebound Holds 16K but Faces Fragile Zone, Warns Glassnode