Bitcoin has reclaimed the $90,000 mark this week, but on-chain data suggests that this move is built on unstable foundations. Despite a substantial cost-basis cluster, demand, liquidity, and futures operations remain low.

Key Insights:

• The $84,000 cost-basis cluster supports 400,000 BTC, yet the spot demand remains feeble above this rate.
• Signals indicate a potential liquidity weakness reminiscent of early 2022, with recent flows largely showing losses.
• Current futures activity appears to be driven more by shorts-covering rather than establishing long positions.

Spot Demand Needs to Increase Above $84,000 Cost Basis

Bitcoin’s recent surge can be attributed to a dense cost-basis cluster centered around $84,000, with over 400,000 BTC acquired within this range, establishing a clear on-chain ‘floor’. However, despite this backup, active participation above this base is limited. Order books are thin, and prices are progressing through areas with scant buyer interest. To maintain levels above $90,000, a shift from passive accumulation to active demand is essential.

Liquidity Needs to Stabilize as Short-Term Holders Exhibit Hesitance

According to Glassnode, Bitcoin is trading below the short-term holder (STH) cost basis of $104,600, placing the market in a low-liquidity environment similar to the post-All-Time High in Q1 2022. The $81,000-$89,000 range is experiencing compression, with realized losses averaging $403 million daily, indicating that investors are exiting instead of strengthening positions. The STH Profit/Loss Ratio has dropped to 0.07x, portraying evaporated buying momentum.

Futures Markets Require Strategic Buy Bids

The surge to $91,000 has primarily resulted from shorts covering rather than fresh long interest. Open interest has continued to drop, and cumulative volume delta remains unchanged, with shorts liquidation facilitating the price movement through $84,000, $86,000, and $90,000. The current neutrality in funding rates reflects a cautious environment among derivatives, with leverage progressively retracting, yet potential buyers are not entering with confidence.

To establish a supportive trend, it is crucial to rebuild long-side open interest with sustained positive funding driven by real demand, as opposed to compelled short exits.

This article does not offer any investment guidance or suggestions. Every investment and trading decision involves risk; readers should do their own research before making any commitment.