Bitcoin has slipped beneath a level the market rarely ignores: the short‑term holders’ cost basis near $113k. Pair that with long‑term holders accelerating distribution and you get a fragile tape where small bids matter and rallies get sold. Is this the fade into a **digestion phase**—or the **reset** that fuels the next leg higher?

What Just Changed

Glassnode data shows BTC trading below the **Short‑Term Holders (STH) cost basis** (~$113k–$114k), a zone that often acts as psychological and technical support in bull phases. Price is also wrestling with the **0.85 supply quantile** (~$108.6k). Losing it risks pushing a larger share of coins into loss, heightening the chance of **emotional selling**. The next deeper liquidity magnet sits around the **0.75 quantile** (~$97.5k).

At the same time, **Long‑Term Holders (LTHs)** have ramped realized distribution from ~10,000 BTC/day in July 2025 to **22,000+ BTC/day**—a classic late‑cycle behavior that tends to cap rebounds and extend consolidation.

Why It Matters for Traders

Falling under cost‑basis levels weakens **confidence** and **liquidity**, making bounces fragile and more prone to fail. If BTC can’t reclaim the STH band, the share of supply in profit can slide toward ~85%, a setup that has often preceded **liquidation cascades** in prior cycles. Overlay a tighter **macro** backdrop (rising yields, sticky inflation expectations, cautious Fed) and the **risk premium** for risk assets expands.

Key Levels to Watch

• Reclaim/hold: $113k–$114k (STH cost basis). Sustained closes above reassert bullish control.
• Line in the sand: ~$108.6k (0.85 quantile). Loss increases coins in loss and downside reflexivity.
• Deeper target: ~$97.5k (0.75 quantile) if sellers press momentum.

Actionable Game Plan

• Scenario map: If BTC reclaims $113k–$114k with rising spot demand and declining LTH distribution, consider adding on retests; if rejected, respect downside toward $108.6k and potentially $97.5k.
• Risk controls: Size positions small into uncertainty, set stops beyond invalidation levels, and avoid over‑leverage while liquidity is thin.
• On‑chain confirms: Track STH/LTH SOPR (profit‑taking cooling = constructive), Realized P/L flows, and the slope of LTH supply—slowing distribution is a green shoot.
• Market structure: Watch funding, open interest, and basis; if leverage compresses while spot leads, the floor is more durable.
• Execution: Favor spot or low‑leverage perps, scale entries near key levels, and let the market show **acceptance** (time above level) before sizing up.

Macro Watch

Rising Treasury yields and a firmer dollar tend to drain **liquidity** from risk. Improvement signals include a rollover in yields, softer dollar, and a less‑hawkish Fed tone. If macro eases as LTH selling tapers, the path to reclaiming $113k–$114k widens.

The Bigger Picture

This looks like a **necessary reset** rather than a confirmed top. Prior cycles saw similar phases: a cool‑down, spot accumulation, and then renewed trend once **spot demand** rebuilt and **distribution** slowed. Patience over panic—let the market prove strength by reclaiming and holding above the STH band.

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