Bitcoin may have carved a local bottom after a brutal 52% drawdown from its October 2025 all-time high near $126,180. Since early April, BTC has rebounded by roughly 18%, now trading at $79,000 — a level last seen in January.

Grayscale Research believes that this surge could signal a durable market bottom, with recent buyers back at breakeven around $74,000. This would lead to reduced sell pressure, a change in short-term sentiment, and maybe even the first phase of a new bull cycle.

The question is whether demand is strong enough to absorb ongoing profit-taking — the key condition separating a bear market rally from a durable trend reversal.

BTC above True Market Mean

Market positioning can be assessed using the True Market Mean — an on-chain estimate of bitcoin’s “real” average acquisition cost (realized capitalization divided by an adjusted effective circulating supply). 

According to Glassnode, that level currently sits near $78,100. In previous cycles, this metric has acted as a regime pivot. Trading below it tends to coincide with distribution and capitulation. Sustained moves above it, by contrast, signal that the market is accepting higher prices than the average acquisition cost — a necessary condition for trend reversal.

Bitcoin hovering just above $78,000 places the market slightly above that exact threshold. This suggests the market is testing whether it can sustain a price above the aggregate cost basis of active investors. Holding this level would indicate that demand is sufficient to absorb supply at breakeven, a necessary condition for trend reversal.

Institutional flows return cautiously

Flows through regulated vehicles are beginning to stabilize. U.S. spot ETFs have returned to net inflows after several weeks of outflows, signalling renewed allocation via regulated vehicles. According to CoinShares, BTC funds recorded three consecutive weeks of inflows, including over $1.1 billion last week alone. 

The derivatives follow closely. According to Conglass, BTC daily open interest has surged from February and March lows of around $45 billion to over $62 billion on April 22.

Corporate demand is adding another layer. On Monday, Michael Saylor disclosed Strategy’s $2.54 billion bitcoin purchase, its largest in over 16 months. The acquisition was partly funded through the issuance of STRC, its dividend-paying preferred shares. Offering roughly 11.5% annualized yield, the instrument attracted steady demand ahead of its ex-dividend date, with shares trading at or above $100 for ten consecutive sessions — a sign of strong investor appetite, even if some of it likely came from short-term dividend capture strategies.

Profit taking still caps upside

Despite improving demand, on-chain data shows that distribution pressure has not fully cleared.

Glassnode’s Short-Term Holder (STH) Supply in Profit — a proxy for the share of recent buyers sitting on unrealized gains — currently stands around 43.2%. Historically, local tops in bear market rallies tend to form closer to its long-term mean near 54%.

This suggests the rally has not yet reached typical exhaustion levels, leaving room for further upside — but also highlighting a clear zone where selling pressure could accelerate.

A complementary signal comes from the Realized Profit/Loss Ratio, which tracks how much profit is being realized relative to losses on-chain. With a 30-day EMA reading around 1.16, profit-taking is already dominating.

In practical terms, investors are using the rally to exit positions at breakeven or lock in modest gains. That behavior is consistent with redistribution phases rather than full trend reversals.

Historically, sharp spikes in this ratio during bear market rallies have preceded renewed weakness unless fresh demand enters to absorb supply.

Key levels: $78K, $83K, $87K

The immediate battleground remains the True Market Mean at ~$78K. Sustained acceptance above this level would mark a structural shift.

Above it, the next major threshold sits around $83,000 — the estimated average cost basis of investors in spot bitcoin ETPs. This level could act as a sell zone, as recent entrants look to exit at breakeven.

Further up, the 200-day simple moving average — currently near $87,000 — defines the broader trend. Reclaiming it would strengthen the case for a medium-term reversal.

Until then, the $80,000 area remains a critical liquidity zone where supply is likely to concentrate.

However, even with improving on-chain structure, macro headwinds remain. April tax season in the U.S. typically triggers portfolio rebalancing and liquidity withdrawals, which can weigh on risk assets. At the same time, persistent geopolitical tensions and elevated oil prices continue to pressure inflation expectations, limiting the likelihood of near-term monetary easing.