Bitcoin Bulls Face $90K Test as Rally Hinges on Trading Volume Surge
Introduction
Bitcoin (BTC) reclaimed the $90,000 price level this week, a move that captured the attention of the entire crypto market. However, beneath the surface of this price milestone, on-chain data and market metrics reveal a rally sitting on precarious foundations. The ascent, while significant, has been characterized by thin spot demand, weakening liquidity signals reminiscent of early 2022, and a derivatives market driven more by the covering of short positions than the establishment of new long ones. For the bulls to solidify this gain and push higher, a substantial surge in genuine trading volume and buyer engagement is not just beneficial—it is imperative. This analysis delves into the critical on-chain and market structure factors that will determine whether Bitcoin can sustainably hold above $90,000 or if it risks a retreat to lower support levels.
The $84,000 Cost-Basis Cluster: A Solid Floor with a Weak Ceiling
A key development underpinning Bitcoin's recent price action is the formation of a dense on-chain support zone. Data from Glassnode reveals a significant cost-basis cluster around $84,000, where more than 400,000 BTC were acquired. This concentration of coins purchased at a specific price creates a clear psychological and technical "floor" for the market, as holders who bought at this level are less likely to sell at a loss, providing a base of stability.
The critical issue, however, lies in the market dynamics above this robust foundation. Despite the heavy accumulation at $84,000, spot buyer participation at higher price levels is visibly limited. Order books remain thin, indicating that prices are moving through zones with minimal active buyer engagement. For Bitcoin to not only reach but also maintain a position above $90,000, the market dynamic must undergo a fundamental shift. It needs to evolve from relying on passive historical accumulation—the coins bought and held at lower prices—to generating active, ongoing demand that can absorb selling pressure in the current price range. A healthier and more sustainable bullish structure would require significantly more spot volume absorption between the $84,000 support and the $90,000 resistance level.
Liquidity Weakness and Short-Term Holder Sentiment Echo Early 2022 Patterns
The current liquidity environment presents another challenge for the ongoing rally. Glassnode has noted that Bitcoin continues to trade below the short-term holder (STH) cost basis of $104,600. STHs are typically defined as entities holding coins for 155 days or less and are often considered a proxy for newer, more speculative market participants. Trading below their average acquisition price places the market in a low-liquidity zone, a condition that bears similarity to the period following the all-time high in the first quarter of 2022.
This similarity is reinforced by other metrics. The market is experiencing compression within the $81,000–$89,000 range, coupled with realized losses averaging $403 million per day. This combination implies that investors are currently exiting positions rather than buying into the perceived strength of the rally. The sentiment among short-term holders is particularly bearish, as evidenced by the collapse of the STH Profit/Loss Ratio to 0.07x. This figure indicates that losses realized by STHs vastly outweigh their profits, reinforcing that near-term demand momentum has evaporated.
For the broader trend to shift positively, two developments are crucial: realized losses must begin to contract, signaling a reduction in panic selling or distribution, and the STH profitability metric must recover to neutral levels or higher. Without this reset in liquidity and sentiment, the market remains at risk of drifting back toward the "True Market Mean" near $81,000.
Futures Market Activity: A Rally Fueled by Short Covering, Not Long Conviction
An examination of the derivatives market provides further evidence that the recent breakout lacks strong foundational demand. The move to $91,000 appears to have been fueled predominantly by short covering rather than the build-up of fresh long exposure. Short covering occurs when traders who have bet against the price (shorts) are forced to buy back BTC to close their positions as the price rises, creating upward momentum that is not necessarily driven by optimistic new buyers.
Key metrics support this analysis. Aggregate Open Interest (OI), which represents the total number of outstanding derivative contracts, has continued to decline. Simultaneously, the Cumulative Volume Delta (CVD), which tracks the net difference between buying and selling volume in the spot market, has remained flat. This indicates that pockets of short liquidations were the primary driver behind the moves through key levels like $84,000, $86,000, and $90,000.
Furthermore, funding rates across perpetual swap markets are hovering near neutral. This reflects a cautious and uncertain derivatives environment where neither longs nor shorts are dominant. While leverage is being reduced in an orderly fashion—which can help prevent cascading liquidations—it also signifies that confident buyers are not stepping in with conviction. A supportive trend shift for a sustained bull run would require a reversal of these signals: a rebuilding of open interest on the long side coupled with sustained positive funding rates driven by actual speculative demand.
Strategic Conclusion: Watching for Signs of Sustainable Demand
The current state of the Bitcoin market presents a clear dichotomy: a strong on-chain support base at $84,000 contrasts sharply with weak spot demand and cautious derivatives activity at higher prices. The reclaiming of $90,000 is a technically bullish event, but its sustainability is entirely contingent on an influx of genuine market participation.
The path forward hinges on several observable factors. Market participants should monitor spot trading volumes on major exchanges for a sustained increase, particularly in the $84,000 to $90,000 range. A recovery in the Short-Term Holder Profit/Loss Ratio above neutral would signal regaining confidence among newer investors. In the derivatives arena, a shift from declining or flat Open Interest to a rising trend, accompanied by long-position buildup rather than just short covering, would indicate stronger bullish conviction.
For now, Bitcoin bulls have successfully defended key support and pushed prices to a multi-week high. However, the battle is not over. The coming days will be a critical test of whether underlying demand can catch up with price action. Until volume surges and market structure shows broad-based strength across spot and futures markets, the rally above $90,000 remains vulnerable. The broader insight is that in mature market phases, price alone is an insufficient indicator; depth, liquidity, and volume are the true determinants of trend longevity.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.