Bitcoin’s April rebound looked like a market trying to repair itself. After falling towards the low $60,000s, Bitcoin (BTC) rallied back above $82,000, helped by improving short-term holder profitability and a derivatives market that was still leaning bearish. As spot demand gave the move a base, negative funding and heavy short liquidations added fuel, turning the recovery into a squeeze higher.
That repair has now failed. Bitcoin has fallen roughly 11% from its May highs, sliding back towards the $70,000s. More importantly, the decline has pushed BTC back below the short-term holder realized price – the average cost basis of coins held by recent buyers. The level that was supposed to confirm recovery has instead turned back into resistance. The market is no longer squeezing shorts higher. It is now pressuring recent buyers lower.
Short-term holder pressure mounts
The earlier recovery had a clear onchain logic. Short-term holders had been underwater for months, and Bitcoin’s (BTC) move back towards $82,000 gave some of them a chance to exit closer to breakeven. That helped explain why rallies into the short-term holder cost basis looked vulnerable. When recent buyers spend weeks or months below their entry price, a return to cost often creates supply as holders reduce exposure.
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Source: Bitcoin Data
Bitcoin has now slipped back below the short-term holder realized price, which was around the $78,000 area. With BTC trading near $70,000, recent buyers are again underwater. That does not mean the market has entered full capitulation, but it does mean the April recovery failed to reclaim the level that typically separates short-term holder stress from short-term holder confidence.
Any rebound towards the high $70,000s may now face renewed breakeven selling. Instead of acting as support, the short-term holder cost basis risks acting as resistance. That is the same behavioural overhang that weighed on Bitcoin before April’s rally, only now the market has tested the level and failed.
SOPR shows pressure has reached newer buyers
SOPR – the Spent Output Profit Ratio, a metric that tracks whether Bitcoin being transferred on the blockchain is sold at a profit or loss – adds another layer to the deterioration. In April, the picture was mixed but improving. The newest holders were realizing profits, while older short-term cohorts, particularly the 90-day and 155-day groups, were still selling below cost. That suggested the rally had helped recent buyers recover, but had not fully repaired the broader short-term holder base.
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Source: Coinmetrics
The latest readings are weaker. The 30-day SOPR has slipped below 1.0, meaning even the newest short-term sellers are now realizing losses. The 90-day SOPR remains above breakeven, but the 155-day SOPR is still well below 1.0, showing that the broader short-term holder base remains under strain. In April, selling at a loss was concentrated among older short-term holders who had been trapped at higher levels. Now the pressure has moved closer to the front of the market. Recent buyers who entered during or after the rebound are also being forced to transact below cost. This makes the sell-off more fragile because it is no longer just legacy supply from prior buyers being absorbed. It is now testing the conviction of the latest buyers as well.
Nonetheless, SOPR should not be confused with total selling volume. It does not prove that short-term holders are dumping aggressively. What it does show is that the coins being spent by key short-term cohorts are increasingly moving at a loss. That is a weaker market structure than the one seen during the April rebound.
Derivatives flip to long-squeeze risk
The derivatives backdrop has also flipped. During April’s rally, funding rates – the periodic payments exchanged between long and short traders in perpetual futures contracts – were mostly negative. Short traders were paying to maintain bearish positions even as price moved higher. That created the conditions for a short squeeze: as BTC rose, shorts were forced to buy back, adding more upward pressure. Late May looks closer to the opposite setup. Funding has turned positive, meaning longs are now paying shorts. At the same time, liquidation data show the stress has shifted decisively to the long side. On 27 May, long liquidations were about $139.9mn versus $12.4mn in shorts. On 28 May, long liquidations rose to about $239.7mn, compared with only $4.5mn in shorts.
That is the mirror image of April. Then, bearish positioning helped accelerate the upside. Now, long positioning risks accelerating the downside. When prices fall into positive funding and leveraged longs are forced to close, selling can become reflexive. Price weakness triggers liquidations, liquidations add more selling pressure, and the decline feeds on itself until leverage is cleared, or spot demand absorbs the selling.
A weaker market
The cleanest read is that Bitcoin has shifted from repair to failed repair. The April rally improved profitability, tested the short-term holder cost basis, and benefited from bearish derivatives positioning. But the market did not hold that level. BTC has now fallen back below short-term holder realized price, 30-day SOPR has moved below breakeven and liquidation pressure is concentrated on longs rather than shorts.
That leaves Bitcoin in a more vulnerable position. The key level remains $80,000 as a psychological threshold and short-term holder cost basis. A reclaim of that zone would suggest recent buyers are being repaired again. Failure there would reinforce the idea that rallies are being sold by underwater holders.
The April rally showed how bearish positioning can fuel the upside when spot demand is strong enough to push price into liquidation levels. The late-May decline shows the reverse risk. If spot demand does not return, positive funding and underwater short-term holders could keep the market exposed to further long-liquidation pressure.
