Bitcoin bulls bounce back but $78k resistance may remain.

Main Receptors:

Despite the recent price gains, 43% of Bitcoin holders remain at a loss as derivatives and onchain data show the bully's guilt.

Increasing demand for AI energy will squeeze mining profits to record lows, forcing major companies to ditch BTC and add it to computers.

Traders face a psychological problem of $76,000, which is the average cost base for major firm owners such as strategy.

Bitcoin (BTC) hit a four-week high on Wednesday, potentially clearing the way for a recent monthly recovery from the $78,700 high recorded in January. Despite a 22% rally from the $60,000 domestic bottom on February 6, several onchain and derivatives indicators suggest bears remain comfortable.

Demand for downside protection through Bitcoin options continues to dominate the market.

Recently sold options were trading at a 10% premium to the corresponding call (call) instruments. In neutral market conditions, this indicator typically ranges from -6% to 6%, a level seen last mid-January when Bitcoin was trading at $95,000.

Professional traders fear further declines, bullish BTC futures demand remains; The annual premium or base rate is currently set below a neutral 5% threshold.

The weakness in Bitcoin derivatives reflects a month-long consolidation after a 32% crash in the first week of February. However, when the price moves above $73,000, the lack of conviction on the part of the bulls shows deep hesitation. This cautious sentiment stems from the fact that a large number of owners are still stuck in the red.

Currently, 43% of the supply is held at a loss based on the last coins moved, according to Glassnode data. By the end of January, when Bitcoin was trading at $90,000, this loss for owners was over 30%. Traders sit on these losses and fear that investors will gradually exit their positions as the price recovers, creating continued selling pressure that could result in additional profits.

Another source of concern comes from the Bitcoin mining sector, which is under pressure due to the rapid growth in demand for artificial intelligence. Rising energy costs and declining demand for the Bitcoin blockchain registry have pushed miners' profitability to an all-time low. Several major listed mining companies have turned to AI computing, offloading their Bitcoin holdings in the process.

The Bitcoin Hashprice Index, which measures the expected daily price of a terabyte of hashing power, fell to $30 on Tuesday, down from $39 three months ago. Investors fear that after a long period of accumulation, miners may turn to net sellers.

Mining companies that previously maintained strategic reserves of bitcoin are now reportedly looking at more profitable opportunities in alternative high-performance computing sectors.

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The strategy's $76,000 cost base could be a turning point for Bitcoin's momentum.

Strategy (MSTR US) remains a prime example of a Bitcoin-centric computing strategy. In the year After buying 720,737 BTC since its launch in August 2020, the company has come under scrutiny after bitcoin fell below its average purchase price of nearly $76,000.

Other publicly traded entities, including Metaplanet (3350 JP) and Twenty One Capital (XXI US), face similar valuation challenges in the current bear market environment.

While a cash-strapped strategy for interest payments on yield-producing assets like STRC is inevitable, bears recognize that prices above Bitcoin's cost base will encourage stock outflows without satisfying current holders.

Essentially, market participants who want to suppress the price have strong incentives to keep Bitcoin below $76,000. Therefore, a recovery to $78,700 may take longer than expected, although the momentum may turn bullish after the key level is breached.