Bitcoin is currently navigating a period of consolidation, trading within a "thin-liquidity" zone known as an "air gap." This crucial phase sees the digital asset establishing a base as the market anticipates fresh demand, balancing recent price pullbacks with signs of opportunistic buying and a more measured speculative environment.
Navigating the $110K-$116K "Air Gap"
After setting a new all-time high above $123,000 in mid-July, Bitcoin experienced a pullback, causing many recent buyers to be underwater and creating a significant supply cluster above $116,000. This retreat propelled BTC into the $110,000 to $116,000 "air gap," a low-liquidity range that historically tends to evolve into an accumulation zone as buyers seek perceived discounts. Evidence of this opportunistic demand surfaced when investors acquired approximately 120,000 BTC following a rebound from $112,000, pushing prices back above $114,000. Despite this, the $110,000-$116,000 band remains light in aggregate supply, suggesting that extended time spent consolidating here could lay the groundwork for future upward movement.
Market Health and Key Resistance
The current rally faces strong resistance near $116,900, representing the cost basis of recent holders. A decisive breach above this level would signal renewed demand dominance, while a failure could lead to a deeper retest of the previous all-time high range around $110,000. Despite the recent pullback, Bitcoin's price is described as being in a "warm" but not "overheated" regime, comfortably above the short-term holder (STH) cost basis of $106,000. This $106,000 threshold is historically significant, often demarcating bullish from bearish phases in Bitcoin's bull cycles. Further indicators, such as the STH supply in profit cooling to 70% and STH spent volume in profit falling below neutral at 45%, suggest a balanced market, with neither buyers nor sellers exerting overwhelming control.
External Influences and Speculative Appetite
Recent movements in the broader market include a notable outflow of 1,500 BTC from US spot exchange-traded funds (ETFs), marking the largest such pressure since April 2025. While historically brief, the persistence of these outflows requires careful monitoring. In the derivatives market, perpetual funding rates have receded below 0.1%, entering a neutral zone. This indicates a cooling of speculative fervor and a more subdued short-term upside conviction among traders. Collectively, these factors suggest Bitcoin is currently entrenched within the $110,000-$116,000 corridor, actively accumulating supply. The market is patiently awaiting sufficient demand to decisively overcome the $116,900 resistance and re-establish its upward trajectory.
