Original Title: Bulls Approach the Ceiling
Original Author: Chris Beamish, CryptoVizArt, Antoine Colpaert, Glassnode
Compilation: Peggy, BlockBeats

Summary

· Bitcoin has broken through the True Market Mean of $78,200 and the short-term holder cost basis of $79,100. If the price can remain above these levels, it suggests that the previous deep value phase may be relatively short-lived, with $85,200 becoming the next key resistance level.

· The 30-day simple moving average of net realized profit and loss has turned positive, reaching 0.003% of market cap; meanwhile, profit-taking by long-term holders has increased to $180 million daily, but still remains significantly below the peak of over $1 billion daily during this cycle.

· Realized losses remain high, currently at $479 million per day, up 140% from the baseline of $200 million per day during this cycle’s stable phase. To confirm the market is entering a more sustained recovery, this indicator needs to continue compressing below $8B daily.

· After BTC reclaims around $76,000, Glassnode’s Moderate Strategy has re-entered configuration mode, capturing recent gains while still focusing on downside protection.

· The 30-day capital flow of the US spot Bitcoin ETF has turned positive, indicating renewed institutional demand and supporting Bitcoin’s return to the $80,000 region.

· Despite the price rebound, perpetual contract funding rates remain mostly negative, indicating persistent short positions, and suggesting that if short pressure continues to release, there could be further upside potential.

· After breaking through, implied volatility at the short end has risen again, while realized volatility remains relatively lagging, causing volatility risk premium to turn positive again.

· Options skew is converging toward neutrality, indicating a weakening demand for downside hedging and a shift toward a more balanced position structure.

· There is a large short gamma cluster near $82,000, increasing price sensitivity. When spot prices trade near this zone, market makers’ hedging flows may amplify price volatility.

On-Chain Insights

Breaking the Mean Level

Last week, this report pointed out that prices faced resistance near the True Market Mean and short-term holder cost basis, confirming short-term upside pressure; meanwhile, the dense accumulation zone between $65,000 and $70,000 was seen as a support base for market recovery toward the $84,000 supply zone.

Now, this recovery has occurred: Bitcoin has risen to $81,000 and broken through the True Market Mean of $78,200 and the short-term holder cost basis of $79,100. This means the price has, in a rally, crossed all active circulating cost bases, including the recent buyer’s cost basis over the past 155 days.

If the price can stay above these two levels in the coming week, the deep value phase that has persisted since early February 2026 will become one of the shortest similar phases in Bitcoin market history. The next focus will shift to the next major resistance near $85,200, the Active Realized Price. This indicator tracks the cost basis of all non-sleeping supply, representing a structural threshold the market must face next.

Profitability Turns Positive

Following the breakthrough of the True Market Mean, the improvement in price structure is also reflected in profitability indicators. The 30-day simple moving average of net realized profit and loss has turned positive, now at 0.003% of market cap. This indicator measures the difference between realized profits and realized losses on-chain, normalized by market cap.

It can be used to gauge whether investors shifting their positions are generally taking profits or cutting losses. Its return to positive signals a constructive phase after a period dominated by losses.

In mid-February this year, the indicator once fell to -0.027% of market cap. While clearly negative, this was less severe than during the extreme loss realization phases of the 2022–2023 bear market. Looking back, this relatively shallow negative level aligns with the shorter duration of the recent deep value phase mentioned earlier.

Long-term Holders Become Active

With profitability turning positive, the key question for the market becomes: Is buyer liquidity sufficient to absorb the increasing distribution pressure from long-term holders and sustain the upward momentum?

After the recent rebound, the 14-day simple moving average of profits realized by long-term holders (holding over a year) has risen to about $180 million daily, similar to levels seen in September 2024 and December 2022.

This group experienced the full bear market cycle recently. As prices recover to more favorable levels, their motivation to realize profits is strengthening. If this expansion continues, distribution pressure from long-term holders could further increase.

However, it’s important to note that this indicator has not yet approached the overheated level of over $1 billion daily seen during the cycle’s peak. This suggests that, at this stage, long-term holders are still relatively restrained in selling, rather than aggressively dumping. Whether the market can continue to absorb this gradually increasing supply while remaining above the True Market Mean will be a key test of whether this recovery has genuine structural support.

Realized Losses Remain High

Although in the early stages of a potential cycle shift, the profit-taking by long-term holders has not yet reached worrying levels, the broader market’s realized losses still pose a more direct drag on current momentum.

Currently, the 14-day simple moving average of realized losses stands at $479 million per day, about 140% higher than the baseline of $200 million during the stable phase of this cycle. This indicates some investors are eager to exit positions during price rebounds and narrowing losses.

If this indicator continues to compress below $200 million daily, it would serve as a strong on-chain confirmation signal that selling pressure is waning and the market is genuinely shifting toward healthier demand.

Before reaching this threshold, the combined pressure of long-term profit-taking and high-level buy-ins with small losses may still suppress this rebound. Especially when short-term catalysts are lacking, and new buyers are not attracted, this pressure will be more evident.

Off-Chain Insights

After the price recovered from around $66,000 lows and effectively broke through the $76,000 zone, systematic strategies began reintroducing risk exposure. Glassnode’s Moderate Strategy, which manages positions based on off-chain market data, has re-entered configuration mode and participated in the recent rally toward $80,000.

This strategy emphasizes downside protection, often lagging during rapid rallies, but aims to re-enter after avoiding deeper retracements and when market conditions improve. The recent change reflects a more constructive market background: prices have regained key levels, and directional momentum is beginning to recover.

ETF Demand Rebuilding Momentum

Demand for the US spot Bitcoin ETF has shown a clear recovery, with its 30-day net inflow moving into positive territory after a prolonged outflow. This marks a clear turning point in institutional risk appetite and is a significant change following heavy distribution during the end of 2025 and early 2026.

Recent inflows have accelerated, closely tracking Bitcoin’s rebound from about $66,000 to $80,000, indicating growing confidence among traditional investors. If this trend continues, ETF demand could again become a structural tailwind, strengthening spot market strength and supporting further price gains.

Persistent Short Pressure

Despite Bitcoin’s rebound from around $66,000 and retesting $80,000, perpetual contract funding rates remain mostly negative. Continuous negative funding indicates that short positions still dominate, and traders are willing to pay to maintain downside exposure despite recent gains.

Historically, such conditions often occur during periods of heightened market skepticism, where rebounds are more likely to encounter short squeezes rather than aggressive longs. The coexistence of rising prices and negative funding suggests the market is “climbing the wall of worry.” If short positions remain under pressure, further upside remains possible.

Short-term Volatility Repricing After Local Lows

Last weekend, implied volatility briefly bottomed out, with volatility levels across all tenors dropping to their lowest since October 2025, prior to the October 10 event.

Subsequently, Bitcoin broke resistance, bringing volatility back into the market, with short-term volatility reacting most strongly. The 1-week implied volatility has rebounded about 6 points from its lows, driven mainly by renewed demand and position adjustments.

Gamma sellers rolling their positions further amplified this change: they bought back short-term options while selling longer-dated options. As a result, short-term volatility was quickly re-rated upward, while longer-term volatility only increased modestly by 1–2 points.

This indicates that the market is re-engaging in options trading in the short term, but long-term volatility expectations have not yet broadly increased.

Implied Volatility Leads, Volatility Risk Premium Rebuilds

Despite a significant price increase over the past week, Bitcoin’s realized volatility continues to decline, with the 1-month realized volatility at 35.38%.

This creates a clear divergence: after the breakout, implied volatility re-prices faster than realized volatility. The volatility risk premium has turned positive again, with the spread approaching 3 volatility points, reflecting renewed demand for short-dated options.

This suggests that realized volatility has yet to catch up with recent price movements. Implied volatility, driven by position adjustments and short-term demand, is rising first, while realized volatility remains relatively controlled.

The current structure still supports carry strategies, but the widening spread indicates the market is beginning to price in larger future price swings than current realized volatility.

Skew Normalization, Downside Demand Weakening

Option skew across all tenors is returning to near-neutral, reflecting a significant change in position structure. After previously maintaining a premium for put options, the 25 Delta skew is converging, though still in the put premium zone.

This change is most evident at the short end. The 1-week skew is now close to zero, indicating decreasing demand for downside protection. Since this metric is calculated as “put options minus call options,” a decline means the premium for puts relative to calls is decreasing.

Longer-dated skews are also gradually declining, albeit more slowly, and still retain some put premium. This suggests the market is unwinding protective positions rather than increasing them, especially in the short term.

This shift occurred after recent price breakthroughs, as traders began reducing hedges and shifting toward directional exposure. The skew indicator no longer shows a strong demand for downside protection.

Large Short Gamma Cluster Increases Spot Sensitivity

Gamma positions reveal a significant short gamma cluster near the $82,000 strike, with nearly $2 billion in risk exposure close to the current spot price.

Short gamma means market makers’ hedging will tend to follow the price: buying when prices rise, selling when they fall. This can create feedback loops, accelerating volatility, and helps explain the recent push toward $83,000.

Strong call buying further reinforces this effect. Over the past 24 hours, call options accounted for about 40% of active volume, adding extra pressure in this zone.

With the spot price right near this large short gamma cluster, the market enters a highly sensitive zone. Small price movements could trigger larger reactions. As hedging flows increase, prices may remain highly sensitive here, with potential for sharp swings in either direction.

Conclusion

Bitcoin is showing early signs of structural recovery: prices are back above key on-chain cost bases and pushing toward resistance near $85,000. Spot demand and ETF flows are recovering, indicating bulls still hold the advantage, but the market is approaching a critical pressure zone where supply may re-emerge.

Meanwhile, derivatives positions remain skewed toward shorts, suggesting further upside could be driven by short pressure release. The options market is resetting, and the large short gamma cluster near current prices increases the potential for amplified volatility testing resistance levels.

Overall, the current trend remains constructive. Bullish momentum has not yet disappeared, but the market is entering a more sensitive phase where flows can be easily amplified. To confirm sustained upward movement, prices need to break through resistance levels supported by ongoing spot demand and diminishing selling pressure.

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