The longer the market presses below resistance, the more supply dynamics take over the situation.
Particularly Bitcoin [BTC] the current market setup seems to reinforce this playbook. On the technical side, BTC’s 13.7% rally so far in the second quarter has put sentiment back into a risky mood, with risk appetite gradually returning. However, from a supply chain perspective, it is still too early to confidently label this a bull market.
As shown in the chart below, the total Bitcoin supply in the hands of long-term holders (coins held for more than 155 days) has reached 66.5%. Yet analysts point out that this remains relatively low compared to historical margins. The reasoning is simple: many holders have accumulated these coins at higher prices, leaving a large portion underwater when they transition to LTH status.
From a technical perspective, Bitcoin continues to trade about 15% below its December opening price of around $90,000.
In this context, BTC’s consolidation creates an interesting situation. The longer the price stays within a certain range, the more supply from the Q4 cohort shifts into LTH hands, while still experiencing unrealized losses. If the market rejects the risk, the risk of capitulation naturally increases as underwater holders may begin to reduce exposure.
Against this backdrop, analysts believe that Bitcoin is far from a confirmed bull market. However, if price decisively breaks through resistance and pushes more long-term holders back into historically bullish range, could this consolidation actually pave the way for the next phase of expansion?
Bitcoin sees leverage decrease and FOMO persists
The past 48 hours have reminded us what Bitcoin volatility really looks like.
From a technical perspective, Bitcoin closed above $79,000 on April 22, posting a second straight weekly higher high after experiencing a rejection of nearly $78,000 the week before. However, the subsequent dip to $77,000 led to market panic, with many analysts expecting another rejection at resistance.
And yet sentiment evolved differently. According to Santiment, the market mood quickly turned from extreme pessimism earlier this week to aggressive FOMO. Just as Bitcoin looked ready to collapse past $80,000, buyers stepped in and pushed the price back above $78.7K. With the $80K level back within reach, rising FOMO suggests traders are once again positioning themselves for continuation.
It is not surprising that many market participants viewed the pullback as a healthy reset.
In this context, as debt levels have eased and sentiment has returned to risk, a breakout above $80,000 could become increasingly plausible. Zooming out on the long-term behavior of holders, however, tells a more measured story. Historically, strong bull market phases only emerge when LTH Bitcoin supply rises above roughly 85%. This is evidence that the current cycle may still be in a transitional phase and not in full expansion.
Until supply reaches that threshold, price threatens to push newer cohorts deeper into unrealized losses. That makes LTH positioning an important signal to keep an eye on when assessing whether the market is truly moving toward a sustained bull run, something that remains off the table unless BTC decisively clears overhead resistance.
Final summary
- Prolonged consolidation under resistance continues to force LTHs into unrealized losses.
- Now that overleveraged positions have been wiped out and sentiment has returned to risk, a breakout could lead to expansion.