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Navigating the Early Stages of Price Discovery
Bitcoin is stirring. After months of consolidation and relative calm, the market is showing subtle but telling signs that the long-anticipated end-of-year bullish scenario could finally be within reach.
Volatility is rising, short-term holders are stepping up to defend their positions and price discovery briefly began to stretch into uncharted territory. But unlike previous vertical breakouts, what we’re seeing now is more of a measured, technical build-up — a tightening coil, if you will, before a potential decisive move.
In this article, we’ll break down the key indicators, statistical insights, and structural levels that give us a roadmap for what may come next.
Let’s get into it.
Price Discovery Phase: Bitcoin is entering early-stage price discovery but lacking the vertical euphoria of a full breakout, building a coiled base for potential acceleration.
Volatility Awakening: Fractal patterns show spikes nearing 20 amid the recent rally, signalling re-emerging energy that could surge into the 30s for explosive upside.
Structural Support at $117,000: The point of control forms a resilient “volume shelf”, offering healthy consolidation potential before the next impulsive leg higher.
Short-Term Holder Conviction: Holders are defending their cost basis with stronger resolve than in previous rallies, positioning the $140,000-$150,000 region as the next major profit threshold.
Price Discovery
“Price discovery” refers to the process by which Bitcoin finds value beyond its previous all-time highs. In technical terms, it’s when the market moves into regions without historical resistance — essentially, a clean slate driven purely by demand.
To track this, I use my Price Discovery indicator that measures the percentage above the previous all-time high (ATH). Every time Bitcoin sets a new ATH, the indicator resets and begins measuring the incremental move from that level.
Bitcoin has recently re-entered price discovery, edging beyond its previous all-time high. But unlike the euphoric surges of November 2024 or the 2021 bull peak, this feels deliberate — like a coiled spring before release.
This indicator quantifies this: it resets at each new high and measures the percentage extension above it. This means it has no historical reference — price discovery occurs where no prior structure exists, making it a pure reflection of market sentiment. Visualised with a colour gradient, it highlights the magnitude of discovery and maps the venture into the unknown.
This early-stage phase is crucial. It indicates a market stretching its wings — buyers are returning, but we’re not seeing that classic “clustering” pattern yet, meaning the euphoric demand that drives explosive price moves hasn’t fully ignited yet.
Bitcoin has begun nudging into new highs, but we haven’t yet seen the “clustering” that typically signals a full-blown breakout like we saw in early 2021 and late 2024.
The Energy Beneath the Surface
Volatility is often the precursor to major moves. The Volatility Fractals indicator tracks the rhythm and intensity of market volatility across multiple timeframes. Think of it as measuring the “energy” building under the surface.
Recently, the metric spiked near the 20 mark during the latest rally, signalling that the market is finally waking up. Historically, when volatility fractals enter the 30s, it often precedes explosive upside — the kind of momentum that propels Bitcoin into its runaway phases.
In general, a fractal spike shows that buyers and sellers are actively engaging at new levels, and a sustained volatility expansion like this one may catalyse the next major leg up in price.
This current fractal view adds depth: short-term spikes often presage longer waves. With global liquidity loosening, expect volatility to amplify demand and potentially accelerate this price discovery.
Current Fractal readings are promising but not yet in breakout territory. Sustained momentum could push Bitcoin into serious levels of price discovery like in November 2024.
Where the True Gravity Lies
Short-term price levels and liquidity are just as important as overall market energy. The Local Volume Profile (LVP) maps traded volumes at different price levels over a given period — in this case, the last 120 days — to reveal the “centre of gravity”.
The point of control (POC) — the price level with the highest volume — sits around $117,000. This is a structural support zone, representing a price area where buyers and sellers previously agreed on value.
Current Implications:
Pullbacks to the POC often provide healthy consolidation zones before a new upward impulse.
High-volume areas act as anchors where market participants have confidence in price.
$117K is the first key support to watch if a correction occurs, signalling where liquidity may absorb selling pressure.
The “point of control” sits at $117,000, a key structural level. This volume shelf represents prior value agreement, often retested before impulses higher. A near-term pullback here would signal healthy consolidation, absorbing supply before expansion.
The Signal Within the Noise
Short-term holders (STHs), defined as wallets that have moved coins within the last 155 days, provide critical insights into market psychology. Their behaviour often signals market turning points — capitulation at bottoms or exuberance near tops.
The Short-Term Holder Cost Bands indicator plots the average cost basis of these holders and creates zones of value and risk:
Lower Green Zone: Deep value, where Bitcoin tends to be heavily undervalued relative to the STH cost basis.
Middle Yellow Zone: Bull market equilibrium, where price aligns with the average holder cost.
Upper Orange/Red Zones: Increasing unrealised profits, indicating risk of distribution.
Bitcoin has recently defended the STH cost basis robustly — a positive sign that buyers are stepping in with conviction. The next key test lies in the orange band sitting at $141,000, historically a threshold where momentum begins to accelerate if cleared.
And with volatility stirring, this breach could materialise in weeks, not months.
Bitcoin recently defended the STH realised price convincingly, showing buyer conviction. The next test: the orange band at $141,000. Breaching it signals overheated profit territory; and with building energy, it could all unfold swiftly.
A Short-Term Statistical Lens
While the Cost Bands offer a behavioural lens, the Short-Term Holder MVRV (Market Value to Realised Value) adds statistical rigour. By incorporating standard deviation analysis, we can quantify how far unrealised profits or losses deviate from historical norms.
The pink overlays at +3 and +4 sigma denote rare upside extremes, where deviations from the norm often precede reversals, as short-term holders’ profits become too tempting to resist.
Right now, the +3 sigma level sits at around $150,000, marking a potential overstretched zone by year-end. This leaves plenty of room for Bitcoin to push aggressively up to $130,000or so.
However, the $140,000 to $150,000 range stands out as a key convergence point. Here, the cost bands and sigma boundaries overlap, likely causing a pause to test whether on-chain valuations hold up against broader market structure.
Price can continue upward, but the area around $150K is where on-chain signals and statistical thresholds converge to signal a potential major resistance.
Mapping the Path Forward
The combination of these indicators paints a clear picture: Bitcoin is transitioning from consolidation into a phase where price discovery could accelerate.
Structural support is holding firm — buyers are defending key zones, volatility is awakening, and liquidity conditions are tilted toward the upside. Yet, price discovery is rarely linear. Sharp pullbacks often hunt liquidity above previous highs, and temporary retreats are a natural part of this phase. Importantly, the underlying foundation now looks healthier than at prior peaks, offering a more constructive environment for the next leg.
This is early-stage price discovery in action — a phase where demand begins to assert itself, but full-blown euphoria has yet to arrive. The real narrative is not only the new heights Bitcoin may reach, but also the resilient structure being forged beneath the surface. The $140K–$150K band remains a critical zone, where short-term profits and statistical extremes converge, and where natural pauses or consolidation are more likely than not.
Viewed through this lens, Bitcoin’s evolution appears less frothy and more foundational.The market is respecting structural thresholds while testing limits — a balance that suggests sustainably driven growth rather than hype-driven speculation.
For me, it’s exactly the structure I want to see.
I’ll catch you in the next one.
Cheers,
