Bitcoin (BTC) Faces Post-ATH Challenges Amid Low Liquidity and ETF Outflows

Bitcoin's (BTC) market sentiment has turned indecisive after reaching a peak above $123k in mid-July, according to insights from Glassnode. The cryptocurrency has since slipped below the $116k threshold, entering a low-liquidity zone often referred to as an 'air gap'. This zone, characterized by minimal trading activity, extends down to $110k, presenting challenges for investors and traders alike.

Market Dynamics and Short-Term Holder Profitability

The recent price drop has affected short-term holders (STH), with their profitability hitting the bull-market mid-line. Despite this, about 70% of their holdings remain in profit. However, without a resurgence in demand, there is a risk of diminishing confidence among these investors, potentially leading to increased sell pressure.

Notably, the market has experienced a significant outflow from Exchange-Traded Funds (ETFs), with a reported decrease of 1.5k BTC, marking the largest outflow since April 2025. This trend coincides with a cooling of funding rates across major perpetual swap markets, indicating a reduction in leveraged long positions.

Entering the Air Gap

After reaching an all-time high, Bitcoin's price pullback to $113k has left many new investors at a loss, forming a substantial supply cluster above $116k. This cluster faced multiple tests before the decisive break below on July 31. Historically, such low-liquidity ranges can evolve into accumulation zones as opportunistic buyers step in to purchase BTC at perceived discounts.

Data analysis shows that approximately 120k BTC was acquired by investors following a rebound from a low of ~$112k, pushing the price back above $114k. Despite this, the air gap between $110k and $116k remains relatively light in terms of aggregate supply, suggesting potential for future accumulation.

Resistance and Future Trends

The current resistance level, around $116.9k, represents the cost basis of recent top buyers. A sustained price move above this threshold would indicate a shift in demand, signaling market stabilization. Conversely, prolonged trading below this level could lead to a deeper correction.

Broader market indicators also highlight a balanced environment, with metrics consistent with typical bull market trends. The short-term holder cost basis, currently at $106k, serves as a crucial threshold in distinguishing bullish from bearish trends.

Investor Behavior and ETF Influence

Investor behavior has been influenced by the recent price adjustments, as the proportion of short-term holders taking profit has decreased to 45%. This indicates a balanced market position, with a near-even split between profit and loss.

ETF outflows have added to the sell-side pressure, yet historically, these have been brief events. Monitoring these flows is essential to discern whether they signify a structural shift in sentiment or a temporary fluctuation.

Overall, the Bitcoin market is in a phase of recalibration, navigating between the $110k support and the $116k resistance. As the market seeks stability, the behavior of short-term holders and ETF movements will be critical in determining the next direction for Bitcoin.

For more detailed insights, visit the original analysis on Glassnode.