Bitcoin is up more than 12 percent since the sharp fall to $80,000 last week. This has provided a momentary relief for the market after a period of intense capitulation. Even with this rally, fears and uncertainties continue to be dominant, in particular after the analysts’ description of what they call the largest short term holder capitulation Bitcoin has ever seen.
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This wave of realized losses—fast, aggressive, and record-breaking—has left many investors questioning whether the recent recovery is sustainable or simply a temporary bounce in a broader downtrend.
Glassnode data indicates that there is a long road ahead. According to analysts, Bitcoin needs to break through the supply clusters that were created earlier by the top buyers in order for it gain meaningful upward momentum. momentum.
The clusters are areas in which a lot of investors bought BTC at inflated prices, and now may be looking to sell at break-even. This increases the probability of heavy pressure from sellers as BTC rises.
Bitcoin is facing critical supply issues
Glassnode reports Bitcoin’s recent rally is about to reach two key supply clusters. These will be decisive in whether it can become a sustainable recovery. The first cluster sits between $93,000 and $96,000, while the second—much larger and more structurally important—spans $100,000 to $108,000.
The zones formed earlier in the cycle by heavy purchasing activity represent areas that many investors currently are either underwater or near break-even.
Glassnode says that because of this, these price ranges can act as a strong resistance. Recent buyers, who have suffered the most recent drawdown, may opt to sell their products once prices return to entry levels. The dynamic of this can lead to temporary supply barriers, which slow down the momentum in times of rapid recovery.
Bitcoin’s capacity to breach these clusters determines whether or not it will be able to regain a path towards a new record high, or continue being trapped by heavy distribution pressure. Market participants are now watching BTC closely as it nears these levels. Clean breakouts would indicate renewed confidence while rejections could mean that the corrective system is still not over.
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Testing support after a sharp multi-week selloff
Bitcoin’s Weekly Chart shows the market trying to settle down after one the biggest drawdowns in the history of Bitcoin. BTC is now back to $91,500 after a steep drop to $80K last week. This indicates that the market has finally stabilized. The rebound is accompanied by a weekly candle with a large lower shadow. This classic indicator of absorption in heavy selling periods.
But despite this rebound, the overall structure is still fragile. Price currently trades below the moving 50-week average. This was the level which acted as a solid support in the previous bull phase. Losing this dynamic support earlier in the month was a significant technical break, and BTC is now attempting to reclaim it from below—typically a challenging move that often acts as resistance.
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This 100-week average, which is located around mid-$80K has been critical in stopping the downward trend and defending the current direction. BTC will continue to hold above this area as long as it remains in the upper zone. This prevents macro changes from taking place.
The volume remains high, indicating a capitulation level of activity. Market is in a critical phase. A sustained close above $92K–$94K would strengthen recovery prospects, while rejection would risk another retest of the $80K support.
Charts from TradingView.com and ChatGPT.
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Source: www.newsbtc.com
