On-chain metrics: Can Bitcoin break through the $130,000 mark?

Source: The Week On-chain, Glassnode; Translation: Golden Finance xiaozou

Bitcoin hit a new all-time high, with the highest trading price reaching $122,600, bringing all BTC investors back to profitability. According to the analysis of key on-chain indicators, if history is any guide, the price may continue to test the $130,000 mark before demand dries up.

Abstract of this article:

• Bitcoin successfully broke through the all-time high and stood above two key accumulation ranges, indicating a strong bullish trend and investor confidence recovery.

• Short-term holders are currently not realizing huge profits, pushing multiple indicators describing this type of investors into the overheated zone.

• We observed the first wave of tokens cashing out at high profits after breaking through the historical high, which is a typical behavioral feature of the market frenzy period.

• The realized profit and loss ratio once soared sharply to break through the 2 standard deviation threshold, and fell back to a more moderate level later this week.

Historical rules show that market tops are often formed after investors have repeatedly taken profits. If Bitcoin demand remains resilient and the market moves higher again, the $130,000 price range will become the next significant resistance level. Although the bullish trend continues, signs of demand-side pressure suggest that caution is needed in the near term.

1Break through the accumulation range

After weeks of range-bound fluctuations between $100,000 and $110,000, Bitcoin has regained its upward momentum and broken through the historical high of $122,000. The cost basis distribution heat map shows that during this period of shock consolidation, there has been intensive accumulation in both the $93,000-97,000 and $104,000-110,000 price ranges. After successfully breaking through these dense supply areas, the area may be transformed into a strong support level, building a potential foundation for future market corrections.

2Return to the price discovery stage

As Bitcoin enters a new round of price discovery, the vast majority of the current circulating supply is in a profitable state. According to the cost basis distribution quartile model, the spot price has broken through the 95th percentile of $107,400. This model is particularly valuable in identifying the formation period of potential market tops - when the price quickly breaks through the 95th percentile, it usually triggers a wave of profit-taking due to the expansion of the holder base, which ultimately drives the redistribution of supply to higher cost prices. If such selling activities continue to accumulate, it may form a top-heavy market structure: a large number of investors hold high-cost chips, making the overall investor group more sensitive to price fluctuations.

3Overheating trend begins to emerge

Bitcoin fell back to $115,900 after hitting a record high of $122,600, a trend consistent with investors taking advantage of the market's strength to increase selling pressure. The pullback occurred after the price briefly broke through $120,000 (i.e., the +1 standard deviation range above the short-term holder's cost basis). Historical data shows that this level often becomes a natural resistance level, especially during periods of high speculative sentiment. If the current upward momentum is maintained, the next key resistance level will be located in the +2 standard deviation range (currently around $136,000).

4Bull Market Compass

Given that the market has confirmed that it has entered a short-term overheated state, the following will focus on key indicators that identify extremely high-risk market structures. By using these indicators, we aim to outline market conditions that usually appear before major tops or sharp corrections.

To measure the degree of recent investor profit dominance, we use the short-term holder profit supply ratio indicator. The indicator is currently at 95%, more than 1 standard deviation above the long-term average of 88%, indicating that new investors are enjoying a significant increase in unrealized profits.

This is the third time the indicator has exceeded the critical value since early May 2025, reinforcing the judgment that the market is entering a more frenetic phase. If the indicator begins to stabilize or fall back below 88%, it may become an early signal of weakening demand or chip distribution.

To assess the extent of unrealized profits held by these investors, we turn to the relative unrealized profits indicator of short-term holders. The indicator just hit the overheat threshold of 15.4% (mean + 1 standard deviation) and then contracted to 13.6%, reflecting the easing of unrealized gains during the price correction.

Historical data shows that this area often marks the beginning of the top formation - which usually has a lag due to the continuous profit-taking behavior of short-term holders. Given that such investors react quickly to price changes, this indicator is crucial to capture early signs of demand exhaustion.

As unrealized profits have entered the overheat zone, it can be expected that short-term holders will accelerate the selling of profitable chips. Such behavior is confirmed when the proportion of profitable trading volume of short-term holders exceeds the upper limit of 1 standard deviation.

This pattern has historically often indicated that the demand side is about to dry up. So far, we have observed the first round of large-scale profit-taking since the peak at the end of 2024.

In addition to the proportion of profitable trading volume, we can also evaluate the intensity of profit realization through the realized profit and loss ratio. The indicator recently surged to 39.8, far exceeding the +2 standard deviation threshold, and then fell back to 7.3 - although still at a high level, it has become milder relative to the bull market environment.

Multiple breakthroughs in the overheated range can serve as a strong signal of extreme profit-taking activities, which will eventually exhaust the inflow demand of the entire market.

5Conclusion

Bitcoin has broken through two dense accumulation areas. This structural breakthrough usually indicates a strong and sustained rise. However, as a more sensitive group, short-term holders are currently in an overheated range of unrealized profits, which is likely to trigger more intense profit-taking behavior.

The current profitable trading volume ratio and the realized profit and loss ratio have both sent out the first round of excessive profit-taking signals. Historical experience shows that such top patterns are often formed through multiple rounds, which means that the market still has potential upside space and may go up to the +2 standard deviation range (about $130,000) above the short-term holder cost basis.