The price of bitcoin may remain stuck in a consolidation phase for a long time if BTC fails to reclaim key support levels. This is stated in a new analytical review.
Currently, bitcoin is trading between important average purchase price levels. This situation has been observed before and then led to a prolonged sideways trend, similar to what the market saw in 2022. Analysts believe that without a confident recovery of support, the scenario may repeat.
An additional signal of caution from major players has been the flows in spot bitcoin ETFs. Over the last period, $708.7 million was withdrawn from them. This is the fifth largest outflow since the launch of such funds and indicates restrained sentiment among institutional investors.
Excess Bitcoin Supply Continues to Pressure the Market
In the latest edition of its regular report The Week Onchain the analytics platform Glassnode pointed to key resistance zones that are holding back bitcoin price growth and making any rallies vulnerable to profit-taking.
Currently, the BTC/USD pair is moving in a wide range. Its lower boundary is formed by the average market price level around $81,100, and the upper boundary by the average purchase price level of short-term holders around $98,400.
According to Glassnode, the recent price reversal at $98,400 repeats the pattern seen at the beginning of 2022. At that time, the market failed several times to consolidate above the average purchase price of recent participants, which eventually led to a prolonged consolidation phase.
“This similarity highlights the vulnerability of the current recovery attempt,” the analysts noted.
Realized price and average purchase price levels. Source: Glassnode
The chart above shows that from February to July 2022, the price of bitcoin was stuck between the average purchase price level of short-term holders and the average market price. After this, the market entered a prolonged bear phase, and the local bottom was formed in November 2022 around $15,000.
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Additional data is provided by the analytics platform Glassnode. Their entity-adjusted realized price distribution metric UTXO shows at what prices the current UTXO of bitcoin were created. The metric indicates a large supply zone above $100,000. Over time, these coins are increasingly moving into the long-term holder category.
According to analysts, this supply volume continues to put pressure on the market. It may limit price growth above the average purchase price level of short-term holders around $98,400, as well as near the $100,000 mark.
“This overhanging supply volume remains a steady source of selling pressure and is likely to restrain attempts to rise above the $98.4K and $100K levels,” Glassnode wrote.
According to them, a noticeable and sustained increase in demand will be needed for a confident upward breakout.
Entity-adjusted UTXO realized price distribution. Source: Glassnode
The bitcoin risk index continues to rise. According to the private investment company Swissblock, the indicator rose to 21 and is now just below the high-risk zone, which starts at 25.
This was reported by Swissblock in a recent post on X. According to them, the current dynamics indicate the continuation of the consolidation phase that formed after a period of heightened risk in previous months.
“The rise in the index indicates a high probability of continued sideways movement, triggered by the extreme risk environment the market has faced in recent months,” the company noted.
Bitcoin risk index. Source: Swissblock
To resume the bull cycle, bitcoin needs to overcome the resistance zone in the $98,000–$100,000 range.
Bitcoin ETF Outflows Rank Fifth Largest
On Wednesday, spot bitcoin ETFs in the US recorded outflows for the third consecutive day. The total amount withdrawn was $708.7 million, according to CoinGlass data.
This was the largest one-day outflow in the past two months and the fifth largest since the launch of such funds in January 2024.
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The largest outflow was seen in the BlackRock IBIT fund, which saw $356.6 million withdrawn. Next is the FBTC fund from Fidelity with an outflow of $287.7 million. Four more funds also recorded negative flows.
Spot bitcoin ETF fund flows. Source: CoinGlass
At the same time, spot ETFs on Ethereum were also under pressure. Over the day, the combined outflow from five funds was $286.9 million.
Over the past three days, $1.58 billion has been withdrawn from bitcoin ETFs. An analyst under the nickname NekoZ noted that the main contribution to this process was made by the BlackRock and Fidelity funds, indicating active risk reduction by institutional investors.
The pressure from ETFs coincided with bitcoin’s rejection of the $90,000 level on Wednesday. Against the backdrop of increasing macroeconomic uncertainty, this raises the likelihood of continued sideways movement. If support around $84,000 is broken, the market may face further declines.
