Bitcoin has returned to the $85,000 level, a critical support zone that bulls must defend to avoid a deeper collapse. After failing to reclaim higher levels, price action has slowed and volatility has compressed, reinforcing a market environment dominated by apathy and fear.
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Sentiment in the crypto world has deteriorated sharply, with a growing number of analysts openly discussing the possibility of a prolonged bear market that will extend into next year. In this context, understanding who is actually selling becomes much more important than the price movement itself.
According to a recent CryptoQuant reportBitcoin’s retreat from the ~$88.2K region to ~$85K provides a clear analysis of market behavior beneath the surface. Stock market inflow data, segmented into Short-Term Holders (STH) and Long-Term Holders (LTH), shows that the decline was not caused by structural distributions from long-term investors.
Historically, bear markets accelerate when long-term holders begin to distribute supply. The absence of that behavior suggests that the current decline reflects positioning adjustments and risk reduction, rather than a collapse in long-term beliefs. As Bitcoin tests $85,000, the market is not just evaluating price support levels.
Short-term profit taking, no structural distribution
The CryptoQuant report from Crazzyblockk provides an accurate overview of who actually caused Bitcoin’s recent decline. On December 15, when BTC was trading around the $88.2K level, short-term holders sent around 24.7K BTC to exchanges.
Crucially, 86.8% of this offering was realized at a profit, while only 13.2% was sold at a loss. In dollar terms, STH’s profitable inflows exceeded $1.89 billion, far outweighing loss-driven sales. This profile clearly indicates that sellers were primarily short-term buyers who lost their steam, rather than panicky participants capitulating under stress.
When the price fell towards the $86K area on December 16, total STH inflows fell sharply to just 3.9K BTC. Although this smaller flow was realized at a loss, its limited size indicates exhaustion rather than an acceleration of selling pressure. While the percentage of realized losses increased, absolute volume did not – an important nuance that is often overlooked in surface-level market analyses.
The behavior of the Long Term Holder reinforces this constructive interpretation. During both days, LTH inflows remained moderate, dropping from around 326 BTC to just 50 BTC. There are no signs of capitulation or meaningful distribution from this cohort. Overall, the data shows that the market is cooling through short-term profit taking, and there is no break in structural selling pressure.
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Bitcoin weekly price structure and key support dynamics
Bitcoin has retreated sharply from its cycle highs and is now consolidating around the $85K-$88K zone. This area is of great technical importance. The price is currently interacting with the rising 100-week moving average, which has served as dynamic support throughout the broader uptrend since 2023. So far, buyers are trying to defend this level, preventing a deeper weekly close below.
Structurally, the market has transitioned from a strong impulsive expansion to a correction phase. The loss of the 50-week moving average earlier in the pullback marked a transition from momentum-driven price discovery to consolidation and mean reversion. However, the longer-term trend remains intact as long as Bitcoin remains above the 200-week moving average, currently well below the price.
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Volume has fallen during the retracement, indicating selling pressure is not increasing aggressively. This supports the view that the measure is corrective rather than distributive. From a risk perspective, the inability to hold the $85,000 region would open the door to a deeper pullback towards the low $70,000 zone.
Conversely, reclaiming the $90K-$92K zone would be necessary to restore bullish structure and momentum on the weekly time frame.
Featured image of ChatGPT, chart from TradingView.com