Bitcoin loses critical support, with Glassnode warning of a deeper price breakdown

Bitcoin is coming under renewed pressure as long-term holders sell at their fastest rate since August, even as some analysts argue the market may be approaching the final stages of a bear-market bottom.

The latest downturn follows a sharp shift in macro conditions after U.S. President Donald Trump unexpectedly nominated former Federal Reserve governor Kevin Warsh to lead the Fed. The announcement strengthened the U.S. dollar, reversed gains in precious metals, and helped push bitcoin through a key technical support area.

According to onchain data from Glassnode, bitcoin had been consolidating just above structural support near $83,400 — the lower boundary of its short-term holder cost-basis model. A decisive break below that level risks extending losses toward $80,700, a zone Glassnode refers to as the “True Market Mean.”

That scenario is now unfolding. Over the past seven days, bitcoin has fallen more than 9.2% and is trading around $81,200. The sell-off has been broader across digital assets, with the CoinDesk 20 (CD20) index down 12.4% over the same period, pulling the Crypto Fear & Greed Index into “extreme fear.”

Despite the drawdown, Glassnode noted that only 19.5% of short-term holder supply remained underwater while BTC was above prior support — well below the roughly 55% level typically associated with widespread capitulation. The data suggests some resilience remains, though buyer confidence is being increasingly tested as prices slip.

Derivatives markets reflect the cautious tone. Funding rates remain muted, signaling limited speculative risk-taking, while options markets show rising demand for downside hedges. Dealer gamma has flipped negative below $90,000, increasing the likelihood of sharper price swings if support continues to give way.

Taken together, the indicators point to a market that is fragile but not yet fully capitulated, with liquidity conditions likely to play a decisive role in determining the next move.

At the same time, extreme pessimism across crypto communities could be sending a contrarian signal. Analytics platform Santiment reports that sentiment has fallen to levels that have historically preceded price recoveries.

In a recent report, Santiment described the surge in bearish social-media commentary as a rare constructive signal in an otherwise bleak environment. “While network fundamentals are stagnant, crowd sentiment has hit extreme negativity levels,” the firm wrote, adding that such excessive pessimism has often marked local bottoms.

Prices have trended lower in recent months as long-term holders step up selling, a move that coincided with a reversal in the U.S. dollar’s earlier decline. Even so, some industry observers believe the current wave of fear may not last.

Bitwise CIO Matt Hougan recently said on CoinDesk’s Markets Outlook that crypto appears to be in the late stages of forming a bear-market bottom, noting that historically, digital-asset markets have tended to move against prevailing crowd sentiment.

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