Joerg Hiller
Oct 22, 2025 19:00
Bitcoin trades below key cost levels, highlighting demand exhaustion and a cautious market sentiment. Long-term holders increase selling, as options market shows defensive trends.
Bitcoin (BTC) is currently navigating a challenging market environment, trading below crucial cost basis levels which signal a potential demand exhaustion, according to Glassnode Insights. This comes at a time when long-term holders are increasingly selling their holdings, adding pressure to the market’s stability.
Market Dynamics and Long-term Holder Activity
The cryptocurrency is trading below the short-term holders’ cost basis and the 0.85 quantile, a situation that indicates waning momentum and growing market fatigue. Since July, long-term holders have been selling over 22,000 BTC per day, a significant uptick that marks sustained profit-taking. This heightened selling activity is contributing to a fragile market structure, raising concerns about a prolonged consolidation phase.
Options Market: Defensive Stance
The options market reflects a cautious sentiment, with a rise in open interest reaching new highs. Traders appear to be favoring puts over calls, indicating a defensive posture against potential downturns. This preference for put options has been driven by elevated implied volatility, a factor that keeps market makers wary and volatility pricing high.
Additionally, the skew towards puts has increased, suggesting that traders are more inclined to pay for downside protection rather than seeking upside exposure. This trend has been particularly evident following a recent liquidation event, which saw a significant increase in put skew.
Volatility and Market Sentiment
Despite the high open interest, the market’s sentiment remains cautious, as evidenced by the elevated implied volatility and the defensive positioning of traders. The recent surge in realized volatility has eroded the advantages previously enjoyed by volatility sellers, marking a shift from a calm to a more dynamic market environment.
This market behavior indicates a transition phase, where exuberance has diminished, and structural risk-taking is subdued. The potential for a sustainable recovery is likely contingent upon renewed spot demand and a stabilization of volatility-driven flows.
Conclusion
Bitcoin’s current position below key cost basis levels and the defensive trends in the options market underscore the challenges facing the cryptocurrency. The ongoing demand exhaustion and long-term holder selling suggest that the market may require a longer consolidation period to regain strength. Meanwhile, the defensive stance in the options market reflects a cautious outlook, with traders hedging against potential downside risks rather than betting on a bullish reversal.
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