Over the past few days, Bitcoin (BTC) has been showing signs of recovery, with the price climbing above $108,000. However, the rally is currently facing growing headwinds which may jeopardize further upside momentum. The bearish pressure is majorly highlighted by the on-chain data and sentiment indicators with miners and long-term holders (LTHs) selling-off. 

As Bitcoin gets higher, the supply dynamics are also starting to swing in the opposite direction. Should buyer activity not increase correspondingly, a price drop could wipe out all the recent gains. The bearish outlook is also enforced by the trend in the derivative market, whereby more traders could be betting against the BTC in the short-term. 

BTC Faces Mounting Pressure from Miners and LTHs

According to recent analysis on CryptoQuant, there’s a looming worrying development for Bitcoin bulls. In particular, Bitcoin’s Apparent Demand metric, which monitors the net market demand difference on the sell-side by both miners and LTHs, has flipped negative yet again. As per CryptoQuant analytics, the 30-day simple moving average of this indicator sits at -36.98.

In general, a negative value of the Apparent Demand indicates an excess supply of BTC compared to demand. In other words, the supply or the amount of coins coming into the market either through new Bitcoin miners or through existing long-term holders participating in the sale, is much higher than the number of buyers interested in that supply. This puts downward pressure on the price as the surplus coins flood the supply.

The resurgence of selling is probably driven by bigger macro uncertainty and diminishing optimism for positive short-term price action. Although tension between Israel, Iran, and the US has cooled down, the extent to which it escalated in the past has already left a mark on investor confidence. As a result, any downward price movement might prompt profit-taking by large investors.

Bearish Sentiments Looms in Bitcoins’ Derivatives Market 

Adding to the bearish outlook is Bitcoin’s long/short ratio. This ratio usually shows the number of traders who are betting on a price increase (longs) compared to those betting on falling prices (shorts). As per data by Coinglass ratio currently sits at 0.90, which is lower than the neutral point (1.0). This means that there are more Bitcoin shorting traders (52.61% than long traders (47.39%).

The shift in sentiment shows eroded investor confidence in Bitcoin’s short-term potential. With the long/short ratio has fallen to less than 1, this indicates that the majority of market players expect a decline in prices. 

Combined with the Apparent Demand metric, the declining long/short ratio indicates that Bitcoin could face a correction. This alignment between both on-chain and off-chain indicators offers a consistent picture of the weakening market strength. 

Key Bitcoin Price Levels to Watch as Supply Booms

The daily chart on TradingView, shows that BTC is trading at  $107,675. This leaves the coin marginally above a major short-term support at $107,044. This level has previously acted as a temporary cushion in the current rally. A breach of this level may lead to a deeper fall in Bitcoin’s price with the price more likely to fall below $105K. Breaching this psychological level could see BTC drop to $104,637 support.

However, the bearish prediction is highly dependent on the market absorbing the current wave of supply. In case buying momentum is not strong enough, the sell-side pressure might overwhelm key support levels and deepen the decline. A steep drop beneath $105,000 would wipe out recent gains. It might also drive a fresh surge of investor risk-aversion.  

On the positive side, fresh interest and consumer participation may turn the trend around. In such a case, Bitcoin might continue to pump. However, key resistance sits at $109,495. Surging past this level could trigger further bullish momentum pushing BTC to yet another attempt to break the all-time high of $111,920. Nonetheless, under current circumstances, the bears seem to be at an advantage.