Bitcoin Bulls Face a Critical On-Chain Challenge at Six–Twelve Month Cost Basis

Bitcoin is currently testing a significant on-chain cost basis after experiencing its longest winning streak in several months. This surge is accompanied by increasing stablecoin reserves, although a declining Sharpe ratio could temper the rebound.

Key Takeaways

Bitcoin is testing a crucial on-chain cost basis, which could indicate future price trends.
The cryptocurrency has experienced its longest winning streak since October 2025.
Analysts are observing a critical threshold where if Bitcoin surpasses it, a bullish trend may begin, while failure to do so could signal continued losses.
Rising stablecoin reserves could indicate potential buying power, but a declining Sharpe ratio raises concerns over the sustainability of the price increase.

Bitcoin tests key on-chain resistance as Sharpe ratio weakens

Bitcoin's Direction Towards 2026

The digital currency briefly surpassed a recent intraday high on January 6, following five consecutive days of gains—the most extended winning streak since early October 2025, according to CoinGecko data. Analysts have pointed out that Bitcoin’s price remains below a crucial on-chain metric: the average acquisition price for coins that last changed hands between six to twelve months ago. Historical analysis indicates that when the price stays below this cost basis, the overall trend is likely to remain bearish, suggesting a higher probability of continued losses.

"Currently, that cost basis is positioned near this crucial threshold," said Crypto Dan. "After several weeks of sideways movement, Bitcoin is beginning to show early signs of a rebound, making this level a critical point to monitor."

If Bitcoin can break above this threshold, it would indicate a significant shift, as reclaiming this level has often signified transitions from bearish to bullish trends. Conversely, failure to surpass this level would imply that the downtrend initiated after October’s all-time high remains in effect.

Bitcoin finds itself at another pivotal point.
In past scenarios where the price reached this zone, the market either experienced a recovery or a reversal.
We are at a similar juncture.
How this situation develops will be critical.
How do you assess this area? $Btc #Btc #Bitcoin pic.twitter.com/RHhiyIBijS — CryptoELlTES (@CryptooELITES) January 6, 2026

Technical evaluations align with insights from analyst Doctor Profit, who noted that Bitcoin has surpassed a short-term resistance level, opening the door to higher price ranges. Market data suggests that Bitcoin may be transitioning into a different phase. Analyst Darkfost highlighted significant growth in stablecoin reserves on Binance, signaling that capital is ready to support price movements. The ratio of Bitcoin to stablecoins on the exchange indicates a potential accumulation of buying power.

However, analyst BorisD has pointed out a troubling trend: despite rising prices, Bitcoin’s Sharpe ratio, which gauges returns relative to volatility, has been declining. This suggests that the recent price increases may be driven more by internal market dynamics and short-covering rather than robust new demand from outside investors.

As the cryptocurrency market keeps a close watch on whether Bitcoin can breach the key resistance level, price movements continue to consolidate.