According to Woofun AI, Bitcoin failed to hold the $85,000 key resistance level, the price fell back to around $83,100, and the market showed clear signs of weakness after a failed breakout attempt. This shift in price status is not simply a technical correction, but is the result of an abnormally low level of participation and recent buyers' large holdings of realizable profits. Since briefly touching this critical point on Sunday, Bitcoin has failed to maintain the so-called 'breakout' trend and continued to decline under pressure from newly emerging sell orders, while the buying force that was originally around $85,000 also withdrew from the market one after another, causing the price center to continue to decline.
The underlying reason is the significant contraction in market liquidity and the structural insufficiency of capital inflows. According to data compiled by Woofun AI, in the seven days before October 6, the average daily transaction volume of Bitcoin on spot exchanges and US spot ETFs was about 6.8 billion US dollars, which is lower than 90% of the trading day since January 2024. Even as Bitcoin tries to break through the resistance level, this weak trading volume trend persists. Although Bitcoin closed at $85,000 on Sunday, its corresponding trading volume was only about half of that of a normal Sunday; and since September 22, no single trading day's spot trading volume has reached normal levels.
At the same time, it is difficult for new capital to keep up with the rise in Bitcoin's market value. Glassnode estimates that in the 30 days up to October 5, the inflow of funds from US spot ETFs, the development of stablecoins, and corporate purchases of Bitcoin brought about $4.9 billion to the market, while the realized market value of Bitcoin increased by about $12.8 billion.
This huge gap between capital inflows and market value expansion has further exacerbated the fragility of the market.
Notably, sellers entering the market are increasingly recent purchases with profitable chips, and the pressure to make a profit settlement is rising sharply. Of all the bitcoins flowing into the exchange on October 4, about 86% came from short-term holders who transferred out of their hands for profit. This percentage is the highest in a year, yet this ratio is less than 40% under normal circumstances. Glassnode defines short-term holders as investors who have held Bitcoin for less than 155 days. Although the transfer of funds to an exchange may indicate subsequent sales, it does not mean that these bitcoins will actually be sold in the end. However, the supply to consider is far more than the bitcoins transferred over the weekend. According to independent data from CryptoQuant, about 92% of short-term holders are currently profitable, and the corresponding number of bitcoins is about 3.27 million.
This means that even though Bitcoin's price dropped by nearly 5% this week, only a few recent purchases have lost money. However, for investors who are new to the market, this buffer is gradually shrinking. According to CryptoQuant's data, the average cost of Bitcoin bought a week to a month ago is about 81,900 US dollars. This value is about 1.4% lower than the current price, representing the average holding cost of some recent investors;
If the price continues to fall, this level is likely to be an important support level. Once the price falls below this level, more such buyers will face unrealized losses, which could change their operating strategies when their Bitcoin holdings are difficult to rise back to $85,000 again.
Structurally, Bitcoin's next trend will be a game between two key thresholds: if it can rise above $85,000, it will test whether stronger demand will be enough to offset recent holders' profit settlement behavior; if it falls below $81,900, it will impact the cost benchmark of investors who have bought within the past month. The reaction of these investors near this price, as well as the recovery in spot and ETF trading volume, will determine whether this week's decline is just a failed 'breakthrough' or will evolve into a further adjustment to recent positions.
The more critical variable is that weak liquidity has further exacerbated this contradiction, and the market may need more spot and ETF purchases to take on Bitcoin in the hands of investors holding profitable chips near resistance levels. If an effective buying acceptance cannot be formed, the price may continue to be pressured in the short term until a new balance is found.