Blockchain analytics firm Glassnode described bitcoin’s current market conditions as being “hedged in fear,” with bitcoin trading below key cost basis levels, which signals demand exhaustion and fading momentum.

The firm noted that long-term holders have been selling into strength, with a significant increase in selling activity — over 22,000 BTC sold per day since July.

This story is an excerpt from the Unchained Daily newsletter.

These dynamics mirror past patterns seen during corrections and periods of market stress, often preceding a mid-term bearish phase. But this time, Glassnode suggests a recovering market will depend on restoring spot demand and mitigating volatility-driven flows.

“If Bitcoin fails to recover above the ~113.1k, a deeper contraction could push a larger share of supply into loss, amplifying stress among recent buyers and potentially setting the stage for broader capitulation across the market,” said Glassnode.