Bitcoin’s Current Rally Faces Sustainability Concerns
The on-chain data of Bitcoin (BTC) has raised concerns about the sustainability of its current rally, with the defense of the $111,000 zone being crucial for the market’s further direction. According to a report by Glassnode on September 25th, the withdrawal from almost $117,000 after the Federal Reserve’s tariff decision is a classic example of “Buy the rumor, sell the news”.
The current reduction of Bitcoin’s all-time high from $111,012 corresponds to a decrease of only 10.5%, which is relatively minor compared to the previous 28% correction of the cycle or the 60% drop in earlier bull markets. However, this exhaustion of the level of stability at the surface level masks underlying concerns.
On-chain metrics, which provide insight into capital flow dynamics, have recorded net inflows of $678 billion by realized CAP growth, almost 1.8 times larger than the previous cycle. Long-term owners have distributed 3.4 million BTC in profits, exceeding previous cycles and highlighting the extent of sales pressure from experienced investors.
Market Structure and Institutional Demand
The market structure shows a fragile balance between institutional demand and the distribution of long-term owners. The realized profit-loss ratio of Bitcoin reached extreme levels over 10 in 2025, which historically indicates a cyclical peak when profit-taking dominates market activity. The American Bitcoin Spot ETF inflows, which were previously heavily sold, collapsed from 2,600 BTC to almost zero a day around the FOMC meeting.
In the meantime, the long-term owner distribution rose to 122,000 BTC per month, creating an imbalance that sets the stage for weakness. Derivatives increased the correction through forced liquidations and dismantling, with futures open interest rates dropping from $44.8 billion to $42.7 billion as Bitcoin fell below $113,000.
Options Markets and Volatility
The option markets reflect increased downward concerns, with PUT/Call ratios rising from 1.5% to 17% after the correction. The overall options open interest, which is near all-time highs, creates a gamma overhang that reinforces volatility, especially after hours, where retailers are positioned short gamma.
Since Bitcoin is now trading at $109,466, the level of $111,800 was the short-term owner cost basis and served as temporary support during the recent sell-off. This technical foundation becomes crucial as the market navigates between institutional accumulation and long-term profit-taking by owners.
The ability of Bitcoin to maintain the threshold determines whether this correction represents healthy consolidation or marks the beginning of a deeper cooling trend. Without renewed institutional demand to compensate for the continued long-term owner distribution, the risk of more significant price declines increases significantly.
For more information, visit https://cryptoslate.com/bitcoin-faces-critical-test-as-on-chain-data-reveals-market-exhaustion/
