Bitcoin Faces High-Risk Environment as Short-Term Holders Remain Underwater

Summary:
Bitcoin is currently hovering around the $90,000 mark, struggling to regain momentum after failing to overcome the $94,000 resistance level. This situation has created a divided market sentiment, as analysts are split on whether BTC will enter a deeper corrective phase or if the recent dip is simply a necessary consolidation before climbing higher. The current price behavior indicates increasing volatility as traders negotiate for short-term dominance.

Key Takeaways

Bitcoin is facing significant resistance and has struggled to maintain the $90,000 level after a rejection from $94,000.
Short-term holders (STH) are at risk, as Bitcoin's price hovers below the STH Cost Basis of $100,200.
The current STH Market Value to Realized Value (MVRV) ratio indicates short-term holders are nursing an average unrealized loss of approximately 8%.
Continued trading below major moving averages signals a bearish broader trend.
A break below the moderate risk zone could increase selling pressure, with the $85,000 area acting as a potential support level.

Bitcoin Faces High-Risk Environment as Short-Term Holders Remain Underwater

Short-Term Risks Persist for Bitcoin

Bitcoin is currently in a precarious situation as it strives to hold above the $90,000 level. After encountering a sharp rejection at the $94,000 resistance, market sentiments are decidedly mixed. Some analysts suggest that Bitcoin is entering a more extensive correction phase, while others regard the pullback as an essential recalibration before a potential upward movement. This conflict in perspectives is reflected in Bitcoin's ongoing price activity, which exhibits rising volatility amidst the tussle between buyers and sellers for short-term market control.

Recent analysis by expert Axel Adler indicates that Bitcoin's short-term risk profile is quite fragile. His risk chart places BTC below the Short-Term Holder (STH) Cost Basis, estimated around $100,200. Presently, Bitcoin's trading range hovers below key moving averages, including the 128-day, 200-day, and 365-day SMAs, underscoring the prevailing bearish sentiment. With Bitcoin currently changing hands around $91,000, it finds itself in a moderate risk area, caught between the STH Cost Basis and a -15% downside threshold.

This positioning suggests that any recent price recoveries should be approached with caution. Until Bitcoin can reclaim the STH Cost Basis, upward movements are more likely to represent mere technical bounces rather than a genuine market reversal.

Breaking down below the moderate risk boundary would signal increased downside risks and could heighten selling pressure. Thus, the $90,000–$100,000 range is critical as Bitcoin prepares for its next directional shift.

STH Losses Continue to Limit Bitcoin's Potential Upside

Adler’s findings further reveal a crucial aspect of the market: analyzing Bitcoin’s all-time highs along with the euphoria zones combined with the Short-Term Holder Market Value to Realized Value (STH MVRV) indicator. This metric evaluates the ratio of Bitcoin's current market price to the average price realized by short-term holders, presenting insights into the profitability and actions of this particular group of investors.

Bitcoin ATH Price Tracking Euphoria Zone and STH MVRV | Source: CryptoQuant

Currently, the STH MVRV is around 0.92, significantly below its historical average of approximately 1.09 and well beneath the neutral level of 1.0. This translates to an average unrealized loss of about 8% for short-term holders.

Historically, when STH MVRV remains below 1.0, it has typically coincided with capitulation events or long consolidation periods rather than extended bullish trends. The last notable euphoria phase emerged during the all-time high in October 2025, highlighting how far current conditions deviate from extreme speculation.

As long as the STH MVRV stays below breakeven, short-term investors may be inclined to sell during price rallies as values approach their cost basis, contributing to a persistent overhead supply. This dynamic adds reinforcing structural resistance around the STH Cost Basis, near the $100,000 mark. Thus, reclaiming this level is not only psychologically significant but also critical for shifting back towards a bullish market structure.

Bitcoin's Recovery Efforts Lack Conviction

Bitcoin’s daily chart indicates a market still ensnared in a fragile recovery effort following a stark rejection at upper levels. After failing to break through the $94,000–$95,000 range, Bitcoin saw a significant sell-off, bringing prices closer to the $85,000 area, where buyers responded vigorously. However, the subsequent rebound has yet to exhibit strong structural strength.

BTC consolidates around critical level | Source: BTCUSDT chart on TradingView

At present, Bitcoin trades near the $90,000–$91,000 region, which was previously a support level that has now transitioned into a pivotal point. The price remains below the 200-day and 365-day moving averages, both exhibiting a downward trend and serving as dynamic resistance levels. The 128-day moving average has also impeded recent attempts to move upwards, reinforcing the perception that the overarching trend remains correctional rather than assertively bullish.

From a structural perspective, the chart reveals a sequence of lower highs since the peak in October, indicating that sellers continue to dominate the macro trend. Notably, trading volume surged during the November-December sell-off, yet the recent bounce has occurred on lighter trading activity. This discrepancy suggests that the upward movement might be driven primarily by short-covering rather than robust demand in the spot market.

Unless Bitcoin can reclaim and maintain its position above the $94,000–$95,000 resistance zone with increasing volume, the risk of another rejection remains substantial. Failure to achieve this could pave the way back to the $85,000 support level, where the market will once again be tested for its underlying resilience.

Featured image from ChatGPT, chart from TradingView.com