$120,000 = Seller's meat grinder? Glassnode data reveals the next battle zone for BTC.

Reprint: Daisy, Mars Finance

Key points:

The Bitcoin market continues to strengthen, reaching a new high of $111,000, marking the third new high in this cycle.

The profitability level of investors and their selling behavior have both significantly increased, but they are still below the levels seen during the previous bull market peak.

Interactions related to exchanges have significantly increased, with approximately 33% of Bitcoin's on-chain transaction volume being conducted through centralized trading venues.

Activity in the derivatives sector is also increasing, with a significant growth in the open interest of both the futures and options markets.

If Bitcoin rises further, $120,000 will become a key area. Based on the crossover of on-chain price models in previous cycles, it is expected that selling pressure will accelerate in this area and its vicinity.

Bitcoin breaks new high

The Bitcoin market remains strong, reaching a new high of $111,000, marking the third time in this cycle that it has broken its historical high. Historically, this price discovery phase is often followed by a brief sell-off as early profit-takers seize the opportunity to exit at new highs and reduce their risk.

Bitcoin has followed this pattern so far, with the price falling back to $107,000 shortly after the initial breakout, then recovering and consolidating around $108,000 for the remainder of the week.

Against the backdrop of a severe macroeconomic situation and escalating geopolitical tensions, Bitcoin's performance has outshone most asset classes, creating an overall outlook filled with uncertainty. In a relatively challenging market environment, this strong performance is indeed an encouraging sign.

Source: Glassnode

Comparing the price performance of the current cycle with that of previous cycles, you will find that although the total market capitalization of Bitcoin differs by several orders of magnitude, there is a striking similarity in structure. The chart below shows the performance since the relative cycle low point:

2015 to 2018 cycle: +1076%

2018 to 2022 cycle: +1007%

Period of 2022 and beyond: +656%

Considering the significant increase in Bitcoin's market value today, and the fact that it remains so close to the previous cycle trends, this is an incredible achievement. It indicates that the demand for Bitcoin is keeping pace with the growth rate of the asset.

Source: Glassnode

Evaluating the accumulation patterns of different wallet sizes, it can be seen that new highs often trigger significant accumulation. This will push the accumulation trend score towards the maximum value of 1.0.

It is worth noting that in March and November 2024, when historical highs of $70,000 and $107,000 were reached respectively, the pressure to increase holdings significantly rose. This indicates that investors tend to buy in large quantities when the market enters a price discovery phase, but it also shows that existing holders tend to take profits when prices are higher. This "herd effect" highlights the converging behavior of market participants at key psychological price points and events (such as breaking new highs).

In contrast, the last cycle, which hit an all-time high of $69,000 in November 2021, has faced significant overweight pressure during and after the price peak. This finally marked the arrival of a cyclical top and kicked off a long bear market in 2022. While a strong overweight is usually a positive sign, it's important to recognise that overwhelming consensus behavior isn't always a reliable indicator of future direction (it can actually be a contrarian indicator).

Source: Glassnode

Profit levels rise

As the market re-enters a price discovery phase, the unrealized profits held by market participants have significantly increased. With the improvement in investors' profitability, it is generally expected that selling pressure will correspondingly rise. As prices increase, a larger scale of buyers is needed to absorb the tokens in circulation to maintain the upward momentum of the market.

The relative unrealized profit indicator is an important tool for measuring the overall scale of market book profits. Currently, this indicator has broken through the +2σ range, a level that historically often coincides with the market entering a euphoric phase. This environment is usually accompanied by a significant increase in volatility, and the duration is often short, with only 16% of trading days' book profits exceeding this level.

Source: Glassnode

In the face of such a highly profitable situation, profit-taking activities have clearly increased, which can be observed through the "volatility-adjusted net realized profit/loss" indicator.

This indicator measures realized profits and losses in terms of Bitcoin, periodically comparing it with the ever-increasing market capitalization of Bitcoin, thereby achieving standardization. In addition, the indicator is adjusted based on the 7-day realized volatility.

As prices break through previous historical highs, the phenomenon of profit-taking has significantly increased, with only 14.4% of trading days showing higher values. This indicates that profit-taking has increased, but has not yet reached extreme levels.

Source: Glassnode

This result is also reflected in the SOPR indicator, which reflects the degree of profit/loss of an asset and can be used to determine whether the selling price of an asset is higher than the buying price. Recent all-time highs have led to a significant increase in locked earnings, with an average profit of +16% per token. For investors, less than 8% of trading days where the level of profitability exceeds this level indicates that investors are massively shifting to profit-taking activities. However, it has not yet reached the level of extreme frenzy seen during the previous price peak.

Source: Glassnode

Exchange activities increased

Centralized exchanges remain the main venues for trading and speculation, with daily capital inflows and outflows ranging from 4 billion to 8 billion dollars. The deposit and withdrawal volume of exchanges, compared to the total transaction volume settled on-chain, can serve as a tool to measure investors' willingness to trade Bitcoin.

Since reaching a historical peak of $109,000 in early 2025, the dominance metric of exchange trading volume has been on the rise, and this ratio continues to climb as the market rebounds. Currently, about 33% of the trading volume on the Bitcoin network interacts with centralized exchanges.

This marks a significant increase in investor demand and trading activity, consistent with the market entering a new price discovery phase.

Source: Glassnode

By combining on-chain token price tagging with Glassnode's centralized exchange address labels, the average profit and loss situation of tokens deposited in exchanges can be estimated. This can provide a more detailed insight into investor sentiment and trading behavior directly related to exchange activity.

Currently, among the tokens deposited in the exchange, the average profit for profitable coins is about 9300 dollars, while the average loss for losing coins is only 780 dollars. This difference indicates that current trading behavior is primarily profit-driven, reflecting a significant change in investor sentiment.

Source: Glassnode

The average profit is 12 times the loss, and the ratio between the two is close to the extreme levels commonly seen in the most active phases of previous bull markets. The extreme level of the average profit-loss ratio for exchanges further indicates that the market is entering a frenzied stage of a bull market.

Source: Glassnode

The leverage level of derivatives is increasing.

With the increase in activities of centralized exchanges, it has become increasingly important to examine the derivatives market, as this helps to understand the level of leverage accumulated in a bull market environment.

Since reaching a local low of $74,000 in April, the open interest in futures contracts has significantly increased, rising from $36.8 billion to the current $55.6 billion. In just the past 49 days, it has increased by $19 billion (a growth of 51%), indicating that leverage levels are on the rise.

Source: Glassnode

Meanwhile, the open interest in options contracts soared from $20.4 billion to $46.2 billion, setting a new historical high. The increase of $25.8 billion is significantly higher than the growth in open interest in the futures market.

The rapid increase in open interest for options reflects the growing maturity of the investor community, as they increasingly utilize options contracts to implement more complex strategies to optimize their risk management and trading positions.

Source: Glassnode

ETF inflows remain strong

In terms of spot ETFs, buyers have been consistently purchasing since late April, and it remains strong. In the past week, the daily inflow of funds into ETFs has exceeded $300 million.

The large-scale and continuous buying from retail and institutional investors indicates that they are still confident in the asset, and it has been an important driving force behind the market's repeated record highs since its launch in 2024.

Source: Glassnode

Price discovery exploration

As the price of Bitcoin returns to the price discovery phase, on-chain data and technical indicators can be used to assess market momentum and identify potential signs of overheating.

The 111-day Moving Average (DMA) and the 200-day Moving Average are commonly used technical indicators for assessing Bitcoin market momentum and trend strength. This can also be supplemented with the on-chain metric of short-term holder cost, which reflects the average purchase price of new market investors. Historically, this level has been a key threshold, often used to differentiate between local bull and bear markets.

111-day moving average: $91,800

200-day moving average: $94,300

Short-term holder cost: $95,900

Currently, the price of Bitcoin is significantly above these three key levels, highlighting the strong momentum of the market rebound since April. It is worth noting that these price levels are numerically very close, and this convergence forms an intersection in the key support area. To maintain further upward momentum, it is crucial to hold this area.

Source: Glassnode

In addition, the MVRV (Market Value to Realized Value Ratio) can be used to define price ranges, thereby highlighting extreme deviations from the average investor cost. Historically, breaking through the +1σ range often coincides with long-term macro top formations.

Realized Price +0.5σ: $100,200

Achieved price +1σ: $119,400

Currently, the price of Bitcoin is fluctuating within the +1σ and +0.5σ range. This indicates that the market is relatively active, but before investors realize profits above the extreme level of +1σ, Bitcoin still has room for further increase. This extreme level often triggers large-scale profit-taking activities, leading to a significant increase in selling pressure.

Source: Glassnode

Finally, the short-term holders' cost can be used to assess local overheating conditions within the +0.5σ and +1σ standard deviation ranges.

Short-term holder cost +0.5σ: $120,300

Short-term holder cost +1σ: $135,700

Historically, the price has fluctuated within the above two ranges for 467 days, and has fluctuated above the +1σ level for 484 days, accounting for only 17.5% of Bitcoin's trading history. This makes it relatively rare to enter this range, which is usually regarded as the upper limit of a local price trend.

Although the MVRV +1σ level is usually associated with macro tops, the short-term holder cost basis (STH-CB) +0.5σ and +1σ ranges are more indicative of the formation of local tops. Combining these models can provide a reliable framework for identifying overbought market conditions.

Source: Glassnode

Summary

Bitcoin has reached a new historical high of $111,000, marking the third new high in this cycle. This milestone has sparked widespread activity across key sectors of the market, manifested in increased profits and profit-taking by investors, heightened exchange interactions, a significant rise in open interest for futures and options, and a sustained increase in demand from spot ETF buyers.

As the market enters the price discovery phase, the price level of 120,000 USD seems to become a key area, and selling pressure is expected to accelerate in this area and its vicinity.