Bitcoin is meeting a major resistance zone worth almost $68bn, with about 880,000 BTC held by investors whose purchase prices sit between roughly $77,500 and $80,300.
The concentration of holdings has repeatedly slowed attempts to push the cryptocurrency back above $80,000. BitfinexAlpha data shows that a relatively small change in price could move tens of billions of dollars of Bitcoin between profit and loss, prompting investors who have endured months of losses to sell near break-even.
Bitcoin was trading at about $77,890 at the time of publication, according to CryptoSlate, after spending much of the previous week below the $80,000 mark.
So far, buyers have absorbed the selling. The key question is whether demand will be strong enough to clear the supply barrier or whether the recovery will again lose momentum around current levels.
Investors return to break-even
Activity among long-term holders suggests some investors are using the rebound to exit without taking substantial losses.
Bitcoin’s long-term holder Spent Output Profit Ratio, known as SOPR, has remained close to 1 for nine consecutive sessions, according to Bitfinex. Readings during that period ranged from 0.88 to 1.19, with the latest figure near 0.98.
A reading around 1 indicates that coins are being transferred at approximately the price at which they were bought.
Bitfinex analysts linked the activity mainly to investors who accumulated Bitcoin during February and March, when prices were close to current levels. Those holders then remained invested through the downturn and are now being given an opportunity to recover their original outlay as the market returns to their entry prices.
The pattern was highlighted by changes in the amount of Bitcoin in profit. When Bitcoin closed at $80,256 on 27 August, 72.1% of the supply was profitable. Several days later, after a close at $77,468, that figure had fallen to 67.7%.
Bitfinex said the difference indicated that roughly 880,000 BTC were positioned within the narrow $2,800 cost-basis range surrounding the market. At a price of about $77,000 per Bitcoin, those holdings represent close to $68bn.
The activity does not yet point to capitulation. Bitfinex said sustained SOPR readings below 0.9, combined with falling prices, would suggest investors were accepting increasingly large losses to leave the market. Instead, selling has generally taken place around break-even, while buyers have so far prevented a sharper decline.
Another important level is Bitcoin’s True Market Mean, an on-chain measure used by Bitfinex to estimate the average acquisition price of active investors. It stands near $76,350, placing the market only modestly above a level at which a wider group of holders would approach their cost price.
Strategy offsets weaker ETF demand
The source of buying demand is also changing. Strategy has returned to the market just as flows into US spot Bitcoin exchange-traded funds have become less reliable.
Strategy purchased 4,603 BTC for $369.7m between 24 and 30 August, ending a 10-week pause in its buying programme. The acquisition took its total holdings to 845,050 BTC and was completed at an average price of $80,318.
That price places Strategy’s purchase directly within the zone where Bitcoin has repeatedly struggled to maintain gains. It was also higher than every Bitcoin daily close since 14 May, even though other investors had been using prices near $80,000 to sell.
The purchase came after US spot Bitcoin ETFs had recorded approximately $3.04bn of inflows during a nine-session run. That streak ended with $201.9m of outflows on 28 August. A $216.7m inflow followed, but the funds began September with a further $236.5m in withdrawals.
The figures do not yet demonstrate a prolonged exodus from the ETFs, particularly after their strong performance in August. However, they indicate that one source of buying pressure has weakened at the same time as Bitcoin has encountered a substantial concentration of potential sellers.
Bitfinex described the development as a handover between the main sources of liquidity supporting the recent rally, with corporate buying helping to compensate for softer ETF demand.
Options market prepares for volatility
The balance between buyers and sellers could become more important if break-even selling continues around $78,000 to $80,000. The greater the amount of Bitcoin released in that area, the more persistent demand will be required to turn the former resistance zone into support.
Derivatives traders are positioning for that balance to deteriorate, despite relatively subdued pricing in the options market.
Bitfinex said average Bitcoin implied volatility was 37.2, placing it in the 18th percentile of daily closes over the past year. Options have therefore been cheaper on fewer than one in five trading days during that period.
Risk protection is concentrated around the period covering several key US economic releases, which could alter expectations for Federal Reserve policy.
For the 11 September options expiry, there is one put option outstanding for every call. Across the wider options market, the put-call ratio is 0.56. Downside positions are concentrated between $68,000 and $75,000, while the largest open interest in call options is at $80,000.
The positioning suggests investors still want exposure to a further rise but are also paying for protection against a fall through the current support area.
The options positioning comes after US payroll and inflation figures, alongside hawkish remarks from Fed Chair Kevin Warsh at Jackson Hole, helped push Bitcoin down from a high above $81,000 on 28 August.
Key levels for the next move
Bitfinex said two daily closes above $82,818, together with improving holder profitability and positive ETF flows, would indicate that the current supply shelf had been absorbed. Such a move would bring another on-chain cost-basis level, around $85,200, into view.
A failure to hold support would present a different outlook. Two daily closes below about $76,657 would weaken the current market structure and could lead to a move towards $73,500. Below that, the short-term holder cost basis is near $69,980.
Bitcoin’s strong August performance offers some historical encouragement to buyers. The cryptocurrency rose by approximately 24% in the week ending 23 August, its biggest weekly percentage gain since March 2023.
Since 2020, Bitcoin has recorded 17 weekly rises of more than 15%. It was higher 30 days later in 14 of those instances, with a median return of 8.4%, according to Bitfinex.
Bitcoin was up 1.53% over the previous 24 hours and remained the number one cryptocurrency by market capitalisation.
The immediate challenge, however, is much closer than those longer-term comparisons suggest. Before Bitcoin can extend its rally, buyers must absorb almost $68bn of supply from holders who have finally been offered a chance to sell close to the prices at which they entered the market.
Oluwapelumi, who covers topics including decentralised finance, hacks, mining and cryptocurrency culture, writes about Bitcoin’s potential and the transformative power of the technology.
Liam Wright, also known as “Akiba”, is a reporter, podcast producer and Editor-in-Chief at CryptoSlate. He believes decentralised technology has the potential to make a significant difference.
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