BTC Rally Pauses Amid Hedging Activity

Bitcoin Pulls Back as Traders Rotate Into Derivatives

After months of steady gains, Bitcoin (BTC) has paused its rally, trading just above $111,000 Friday afternoon (Hong Kong time), up roughly 2% over the past week, according to CoinDesk data. The pullback from recent highs above $126,000 reflects a slowdown in momentum, with long-term holders selling into strength and traders rotating capital into defensive derivatives positions.

Spot Market Pressure

Reports from Glassnode highlight repeated drops below key cost-basis levels as signs of market fatigue, while CryptoQuant notes declining realized profits and rising exchange inflows. Both suggest capital remains in crypto but is shifting from spot markets and ETFs into futures and options, making volatility the primary traded asset.

Glassnode identifies $113,000 as a short-term cost threshold; dipping below it signals recent buyers are sitting on losses, eroding confidence and prompting capitulation.

Long-Term Holder Trends

Since July, long-term holders have been selling at rates exceeding 22,000 BTC per day, weighing on sustained recovery. If BTC fails to reclaim $113,000, losses could extend toward $108,000–$97,000, where 15%–25% of supply historically becomes unprofitable.

Derivatives Rotation and Hedging

ETF inflows have slowed, exchange reserves are rising, and options markets show record-high open interest with heavy put demand. Market makers’ hedging—selling rallies and buying dips—has capped price action, leaving the market delta-neutral.

Outlook

Bitcoin is in a consolidation and rotation phase rather than a collapse. A meaningful rebound will likely require renewed spot demand, calmer derivatives activity, and macro catalysts such as Fed rate cuts or a revival in ETF inflows. For now, BTC is catching its breath, with volatility remaining the market’s main focus.