Bitcoin Holds 4% Above STH Cost Basis As Mature Bull Cycle Demands Discounts

[Ben Graham]

Bitcoin has slipped more than 8% from its all-time high of $124,500, fueling bearish sentiment across the market. While this correction is relatively modest compared to previous drawdowns in the current cycle, the tone surrounding BTC has turned noticeably negative. Traders and investors appear cautious, with many questioning whether the market has the strength to stage another push higher in the short term.

Top analyst Axel Adler provided insights that add important context to the current landscape. According to Adler, Bitcoin is now trading with only a 4% markup above the average purchase price of Short-Term Holders (STHs). This minimal premium highlights how close BTC is to levels where recent buyers entered the market. Historically, such narrow margins suggest that confidence among short-term participants is fragile, as even slight downward moves could push many holders into losses.

This dynamic helps explain why sentiment feels heavier than the actual size of the correction might justify. While long-term fundamentals remain intact, the short-term picture reflects a tense phase in which buyers are hesitant, and bears see an opportunity to press their advantage. For Bitcoin, holding above critical support may prove decisive in shaping the next move.

Bitcoin, Fed Cuts, And The Need For Discounts

According to Adler, the recent Federal Reserve rate cut provides a supportive backdrop for risk assets like Bitcoin. Lower rates traditionally boost liquidity, which tends to benefit equities and crypto alike. However, Adler cautions against assuming that monetary easing guarantees a smooth rally. He reminds investors that markets often behave with a “buy the rumor, sell the news” pattern, where initial optimism gives way to volatility as traders lock in profits.

Adler emphasizes that the real demand for Bitcoin will only emerge if the market presents obvious discounts. Historically, sharp pullbacks have attracted sidelined buyers, fueling stronger rallies. At present, Bitcoin trades with a 15–20% markup relative to the average purchase price of Short-Term Holders. This is a danger zone, as data shows that at these levels, holders typically begin offloading coins, adding selling pressure. For comparison, at Bitcoin’s previous all-time high, the markup was only 13%.

This dynamic highlights how different the current phase is from earlier in the cycle. In January 2023 and 2024, markups surged as high as 40%, yet investors continued buying, confident they could resell at higher prices in the future. Now, however, the bull cycle is far more mature. The appetite to chase highs has faded, with investors wary of getting trapped in positions that might remain underwater for years.

For Bitcoin to reignite real demand, Adler argues, it will need to trade at more attractive levels that clearly signal value. In a mature market, buyers no longer blindly pile in at peaks—they wait for corrections. This shift underscores that sustained rallies require not just liquidity, but also meaningful discounts to entice fresh capital.

Price Action Details: Key Levels To Watch

Bitcoin is trading at $114,042, showing renewed strength after rebounding from early September lows near $110,000. The 12-hour chart highlights that BTC is now pressing into resistance around the 100 SMA at $114,679, a level that has acted as a ceiling during recent attempts to rally. A decisive break and close above this moving average could confirm momentum and open the way toward $116,000, with the major resistance at $123,217 as the next target.

The 50 SMA at $112,025 and the 200 SMA at $112,167 are now aligned as short-term support, suggesting that Bitcoin has built a solid base in the $112,000 zone. This cluster of support levels provides bulls with a strong defensive line to sustain momentum. If BTC holds above this area, the bias favors a continuation higher.

However, the market is not without risk. Failure to break through the 100 SMA convincingly could trigger another period of sideways consolidation, or even a retest of $112,000. A deeper rejection may put $110,000 back in play.

Featured image from Dall-E, chart from TradingView