Bitcoin’s (BTC) price collapsed to $83,223.04 after a 6.5% correction over the past 24 hours.
According to a recent Glassnode report, BTC is currently trading in a low-liquidity “air gap” zone between $70,000 and $88,00. It added that the absence of demand heightens the risk of further downside.
The report tied the downside pressure to market-wide selling and the impact of the Bybit hack. The Cost Basis Distribution (CBD) heatmap reveals a significant reduction in realized supply between $70,000 and $88,000, resulting from rapid price appreciation outpacing capital inflows.
Market weakness and investor stress
As Bitcoin surged to new highs, long-term holders began distributing their supply, weakening momentum. The subsequent market decline, exacerbated by the Bybit hack, has pushed Bitcoin’s price back into the low-liquidity zone.
Bitcoin falling to the $83,000 zone has put mounting pressure on investors, as indicated by the Short-Term Holder Market Value to Realized Value (STH-MVRV) ratio of 0.95. This metric suggests that recent buyers are, on average, holding positions at a loss of approximately 5% relative to their cost basis.
The adjusted STH-MVRV shows a 15.8% decline from its quarterly median, breaching the one standard deviation threshold (-11%). Historically, such levels have preceded capitulation events or forced liquidations, as unrealized losses push investors to sell at lower prices, accelerating market declines.
The report has turned to the Short-Term Holder Spent Output Profit Ratio (STH-SOPR) to assess new investor sentiment. This ratio measures whether recent buyers are selling at a profit or loss.
The STH-SOPR has declined by -0.04 from its quarterly median, significantly below the one standard deviation threshold (-0.01). This reflects increased loss realization, with many short-term holders exiting positions at a loss.
Sharp SOPR contractions have led to temporary stabilization as weaker hands exit, though prevailing macroeconomic conditions suggest that further declines remain possible unless strong demand emerges.
Bybit hack
As the Bybit hack unfolded, market volatility intensified, triggering a broader downturn. Declining liquidity and weakening spot demand contributed to selling pressure, leading to an extended market correction.
Bitcoin’s monthly momentum has fallen by -13.6%, while other major crypto have experienced even steeper declines. Ethereum is down 22.9%, Solana has dropped 40%, and the Meme Coin Index has collapsed 36.9%, highlighting the prevailing risk-off sentiment in the market.
This sharp downturn has reversed months of upward price momentum, bringing Bitcoin back to levels last seen briefly in November 2024.
The report noted that demand catalysts and liquidity conditions would determine the potential for recovery or continued downside risk as the market is seeking stability.
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