BitcoinMarkets
|7 min ReadBitcoin pullback forces traders to choose patience over pain
Lucca Menezes
Senior Analyst
Published
Jan 16, 2026
Bitcoin just slipped back under six figures and the tone has changed. What looked like a clean, trending bull move now feels more like a corrective phase. The odds of blasting to fresh all-time highs in the next few weeks have dropped below 50 percent. That can flip again if key levels are reclaimed, but until that happens, the market is acting less like a powerful uptrend and more like a market working off excess.
This is where people usually get hurt. Buying every dip works in a confirmed bull. In a potential bear or deeper correction, the same playbook leads to lower and lower entry prices, more stress, more drawdown. Short, sharp rallies, then fast retracements. A lot of noise. In that environment, reacting to data matters more than trying to call the exact bottom. Everybody knows it is tempting to be a hero, but heroes often get liquidated.
Short term holders lose control of the trend
One of the cleanest signals right now comes from the Short-Term Holder Realized Price. In the last cycle, Bitcoin did not bottom in one clean move. There were multiple dips, many “this has to be the bottom” moments, before the real low formed. Throughout that period, short term holder cost basis acted as a ceiling. Only when price reclaimed that level and held it did a sustained recovery begin.
Today, we see a similar pattern. Price has fallen back below that short term holder line. As long as BTC trades underneath it, the market is saying short term money is under water and selling into strength. If Bitcoin can meaningfully reclaim this level, the entire picture changes. That is why a small, measured allocation on this dip can make sense, while holding off on heavy buying until we see broader confluence is the more defensive move.
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For traders, the key is not the ad. The key is the data. If short term holder realized price is resistance, you treat bounces with suspicion, not as guaranteed new legs higher.
On-chain value zones cluster in the mid 50000s
To understand where the broader market’s cost basis sits, you look at the MVRV Z-Score and the Bitcoin Realized Price. Together, they tell you where the average on-chain cost basis is and how stretched price is versus that base. Right now, the realized cost basis of the network clusters around the mid $50000s. That number is rising day by day as more coins change hands at higher levels.
Historically, true bear market bottoms have formed when BTC trades below realized price. That is the moment when the average coin on the network is under water. We are not there. Price is pulling back toward that zone, but it has not yet traded below it. The same story shows up on the 200-week moving average heatmap. This classic long term support band also sits in the mid $50000s and is creeping higher.
In past cycles, when spot price met the 200-week moving average, that confluence marked powerful accumulation zones. Not always pretty at the time, but historic in hindsight. Because both realized price and the 200-week moving average rise slowly each day, a potential bottom in this cycle might form around 65000, or even higher, depending on how long Bitcoin grinds lower.
The point is simple. Value tends to emerge when spot trades close to the average historical cost of the network and when that level lines up with strong buy support.
Now add the Value Days Destroyed (VDD) Multiple. This metric looks at how active large, old coins are. Very low readings mean long term holders are sitting tight, which has often aligned with market bottoms. Sharp spikes can signal capitulation pressure, the washout that often marks or precedes a major turning point.
Right now, VDD Multiple is rising while price is falling. That tells us experienced holders are distributing into weakness. This is not typical of a final cycle bottom, where forced selling is extreme but short-lived. It looks more like an unwind than an exhaustion.
Long-Term Holder Supply backs this up. It has been trending down. For a durable bottom, you want to see that supply stabilize and start growing again. Bottoms form when the most patient players begin to accumulate, not when they are still exiting.
You can also look at derivatives. Heavy short positioning, negative funding on Bitcoin perpetuals, and large realized losses are the hallmarks of peak fear. Those are the moments when weak hands capitulate and strong hands quietly absorb supply.
Today, funding has not shown the kind of heavily negative, washed-out extremes that have marked past cycle lows. Without that stress in derivatives and without a wave of realized losses, it is hard to argue that the market has fully flushed out.
What Bitcoin must reclaim to look bullish again
Let us assume the bearish scenario is wrong. That is what every long term holder wants. For that to be true, Bitcoin needs to start taking back key structural levels with conviction.
First, the psychological $100000 zone. That is where many late buyers stepped in, so reclaiming it signals that demand is overwhelming their supply. Second, the Short-Term Holder Realized Price. Third, the 350-day moving average that shows up in the Golden Ratio Multiplier framework.
Temporary wicks above these levels do not count. One-day closes do not impress serious players. What matters is sustained closes above them, backed by healthy risk sentiment across global markets. If BTC can do that, the trend starts to look like a renewed bull instead of a complex correction.
Until then, the data leans cautious. Bitcoin’s long term fundamentals remain strong. The network is not broken. Adoption has not vanished. But the short term market structure does not look like a clean, healthy bull trend.
Given that backdrop, the strategy that makes sense is simple and disciplined. Avoid buying every single dip. Wait for confluence from on-chain value zones, long term moving averages, and funding stress before scaling in aggressively. Respect the macro environment and the ratio trends. Turn aggressive only once the market proves strength by reclaiming and holding those key levels. Most investors never nail the perfect top or the perfect bottom. The real game is positioning near high probability zones with enough confirmation to avoid months of unnecessary drawdown while still catching the next powerful leg when it finally shows up.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.