Bitcoin’s early 2026 rally has carried price directly into a wall of overhead supply, with the $95.6K to $96K region now acting as the battleground between profit-taking long-term holders and fresh demand. According to Glassnode’s latest on-chain analysis published January 14, the market faces a familiar test that’s determined the outcome of every major recovery attempt since November 2025.

At press time, BTC trades at $97,797, up 2.06% in 24 hours—though this push higher came on thin futures volume rather than organic spot accumulation.

The $93K-$110K Supply Cluster

The Long-Term Holder Cost Basis Distribution Heatmap reveals a dense concentration of coins accumulated between April and July 2025, spanning roughly $93K to $110K. Every rebound since November has stalled at the lower edge of this zone as holders who bought near cycle highs look to exit positions.

Here’s what matters: the rate of selling has dropped dramatically. Long-term holders are currently realizing approximately 12,800 BTC per week in net profit—a far cry from the 100,000+ BTC weekly distribution seen at cycle peaks. They’re still net sellers, but the intensity has cooled considerably.

For context, Bitcoin hit its all-time high of $126,272 back in October 2025. Current prices represent a roughly 23% drawdown from that peak, putting many Q2 2025 buyers underwater or barely at breakeven.

The $98.3K Line in the Sand

Short-term holder cost basis sits at $98.3K—essentially the aggregate entry price for recent buyers. This level has historically separated corrective phases from durable uptrends. Sustained trading above it would signal that new demand is successfully absorbing overhead supply.

Repeated failure to hold above $98.3K risks triggering defensive selling from newer participants who can’t stomach losses. The True Market Mean at approximately $81K represents the deeper support level; losing that would open the door to a capitulation phase reminiscent of April 2022 through April 2023.

Thin Liquidity, Big Moves

The recent push toward $96K wasn’t driven by a wave of fresh buying. Glassnode’s analysis points to a derivatives-led short squeeze on comparatively thin futures volume. Modest positioning shifts generated outsized price responses—a double-edged sword that works both ways.

Spot market behavior has turned more constructive. Binance and aggregate exchange flows have shifted into buy-dominant regimes, while Coinbase—the most persistent source of sell-side pressure during consolidation—has meaningfully slowed its selling activity. But this isn’t the aggressive accumulation typically seen during full trend expansions.

Institutional flows tell a similar story. Spot ETFs have moved back into positive territory, acting as marginal buyers again. Corporate and sovereign treasury flows have flattened rather than accelerated. Balance-sheet demand is stabilizing price, not driving it higher.

Options Market Sees Risk Ahead

The derivatives complex reveals an interesting tension. Implied volatility remains low across the curve, suggesting traders expect near-term stability. But 25-delta skew stays biased toward puts, particularly in longer maturities—meaning participants are paying for downside protection even as they hold long exposure.

Dealers are currently short gamma around spot in the $94K to $104K range. Translation: hedging flows will amplify moves rather than dampen them. If price breaks decisively in either direction, expect acceleration rather than mean reversion.

The 100K call strike shows a clear split in positioning. Near-dated maturities show net call buying, while longer-dated contracts show net selling. Traders are betting on a potential 100K retest but monetizing upside at longer horizons—tactical optimism paired with structural skepticism.

What Comes Next

The setup heading into Q1 is constructive but fragile. Sell pressure has eased, volatility risk is being deferred rather than discharged, and thin liquidity means relatively modest inflows could generate outsized moves. Corporate treasuries are buying BTC at three times the mining supply rate, according to recent reports, providing a potential demand catalyst.

But the market needs spot accumulation and sustained ETF inflows to rebuild—not just short squeezes on light volume. Until that happens, direction remains hostage to derivatives positioning and liquidity conditions. The $98.3K short-term holder cost basis is the level to watch. Clear it convincingly, and the path toward retesting October’s highs opens up. Fail repeatedly, and that $81K True Market Mean starts looking relevant.

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