Bitcoin faces a significant downside risk, potentially dropping to $88,000, as key on-chain metrics signal weakened demand and increased selling pressure from major investors.
On-chain analytics firm Glassnode warns the cryptocurrency is in a “deep correction phase,” struggling to maintain critical price levels.
This bearish outlook intensified recently after U.S. Federal Reserve Chair Jerome Powell’s comments dampened hopes for imminent interest rate cuts.
Bitcoin recently fell below $108,000, trading around $106,500. The asset has lost 15.4% from its record high of $126,000 registered earlier this month.
Glassnode’s latest weekly report highlights Bitcoin’s failure to close a weekly candle above the $113,100 cost base for short-term holders over the past two weeks. This level is considered the “dividing line” between bullish and bearish momentum.
Staying below this threshold, after six months of consistent trading above it, suggests a significant deterioration in spot market demand. This could precede a deeper price drop.
If this dynamic continues, the next major structural support is identified around $88,000. This level has historically marked the bottom of more profound corrections in previous cycles.
On-chain data shows long-term holders are currently selling at a rate of 104,000 BTC per month, representing the largest distribution wave since July 2025.
The daily volume of transfers from long-term holder wallets to exchanges has surged to $293 million, more than double the average of the last 12 months.
This selling behavior contrasts with historical bull phases, where sustained accumulation by long-term holders was a prerequisite for extended price expansions. Glassnode considers a structural recovery unlikely until this trend reverses.
Short-term holders are also experiencing moderate losses, with a key metric indicating a progressive erosion of investor conviction.
In the derivatives market, implied volatility has decreased since October, and aggressive bearish hedges have been unwound. Traders are now betting on controlled pullbacks between $105,000 and $110,000, rather than a larger collapse.
However, Glassnode had previously warned that this market stability was conditional on the Federal Reserve’s tone. A restrictive outcome could revive volatility and increase demand for protective put options.
Bitcoin largely traded within a range of approximately $100,000 to $120,000 throughout 2025, experiencing an extended bull cycle marked by repeated all-time highs. This period of stability may now be ending as key price levels come under pressure.