Bitcoin's recent return has revived the buy-the-dip narrative, but the data tells a more complex story. After a nearly 15 percent drop and quickly touching $60,000, Bitcoin's price has risen over 11 percent, enticing traders back into long positions.
At first glance, the return looks promising. Bearish patterns, increasing leverage, and weak spot demand suggest that the market may not yet be safe. With a potential 25 percent downside still in place, the latest return is now under close scrutiny.
Bear Flag, increasing leverage, and declining exchange supplies signal risky optimism.
The short-term risk for Bitcoin is already visible on the 4-hour chart.
After a sharp sell-off near the $60,000 mark, Bitcoin's price formed a recovery structure that now resembles a bear flag pattern. This formation is often seen when the price pauses after a sharp decline and then continues downwards. If the lower trendline level is broken, the pattern suggests a nearly 25 percent drop to the $48,000–$49,000 range.
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However, this technical warning has not dampened the growth of leverage.
After a 11.18 percent return, new long positions worth over 540 million dollars were opened solely on Binance. This indicates that traders are once again using significant leverage and believe the bottom has been reached. Similar behavior has been observed before major liquidations in previous price declines.
At the same time, the activity in the spot markets reflects an increasing buy-the-dip mentality.
Bitcoin's supply on exchanges decreased from about 1.23 million BTC to 1.22 million BTC between February 5 and 6. The decrease indicates that traders are moving coins to wallets possibly for short-term storage and are anticipating price increases.
Also, well-known figures and social media sentiment have turned more optimistic, supporting the 'Buy-the-Dip' narrative.
These signs together may indicate excessive confidence.
At the same time, a fragile chart pattern forms, with increasing leverage and early dip buying. As optimism grows before the correction of structural weakness, the risk of a downturn often increases instead of decreasing.
Long-term holders continue to sell as the support for realized price rises.
As short-term traders turn bullish, long-term holders—the most stable group—act in the opposite direction.
The Long-Term Holder Net Position Change, which tracks investors holding for over a year over a 30-day period, has remained deeply negative since the beginning of January. On January 6, this metric showed a net sale of about 2,300 BTC. By February 5, the figure had worsened to about 246,000 BTC.
This represents nearly a 10,500 percent increase in long-term selling in just one month. Simply put, the most stable believing investors continue to reduce their exposure.
The development is particularly concerning when compared to the realized price of long-term holders.
The realized price indicates the average acquisition cost of coins for long-term holders. Historically, as Bitcoin approaches or falls below this level, significant market stress has been observed. In previous cycles, major price rallies only began once the price had stabilized around this area, albeit not immediately.
At the time of writing, the realized price for long-term holders is approximately 40,260 dollars.
As Bitcoin approaches this level, an increasing number of long-term investors are close to breakeven on their investments. If the price falls below this level, many will move to losses, which often accelerates selling. This was seen at the end of 2022 before the bear market bottom was formed.
So far, no reallocation has yet occurred.
Long-term holders continue to sell and are not accumulating coins. Their realized price level currently acts as a significant downward pull. This suggests that the market has not yet gone through the full deleveraging and redistribution phase.
Key Bitcoin price levels indicate why 48,000 and 40,000 dollars are the next important levels.
All technical and on-chain metrics currently point to a few critical price zones.
On the downside, the first major support level is around 53,350 dollars. If this does not hold, the 48,800 dollar area opens up, hitting the bear flag target price and previous consolidation zones.
If 48,800 dollars is broken, attention will shift to the realized price of long-term holders, which is around 40,260 dollars.
This level represents the deepest structural support in this cycle. A move to this area would indicate widespread selling among long-term investors and reinforce a deeper bear market phase.
In the worst case, continued weakness could open the way to even 37,180 dollars, based on longer-term assessments and historical support zones.
To turn bullish, Bitcoin must reclaim the 69,510 dollar level with a sustainable four-hour closing candle to restore short-term credibility. A breakout above 73,320 dollars is needed to negate bearish patterns.
Before this, price rallies remain vulnerable.
The buildup of leverage, long-term holders selling, and key support levels approaching. Currently, the bounce is occurring without structural confirmation. Therefore, buy-the-dip strategies are more susceptible to rapid corrections than to sustainable rallies.