Bitcoin (BTC) appears to be setting the stage for a potential rally in 2026, but first it needs to clear some significant hurdles. According to Glassnode data, the cryptocurrency has climbed back from around $87,000 into the mid-$90,000 range as profit-taking pressure finally subsides.

The recent bounce reflects exhaustion among sellers, particularly long-term holders who were distributing heavily during the fourth quarter of 2025. That selling wave has largely run its course, creating space for stabilization and recovery.

The Supply Wall Problem

Here's the challenge: Bitcoin now faces a substantial overhead supply zone stretching from roughly $92,000 to $117,000. This range represents a concentration of recent buyers who are sitting near breakeven and potentially looking to exit. Absorbing this supply won't happen overnight—it's going to take time and sustained demand.

The most critical marker is the short-term holder cost basis, which sits near $99,000. Think of this as the average entry price for recent buyers. A sustained move above this level would signal that confidence is returning and the trend is recovering. Failing to reclaim it, however, increases the risk of prolonged consolidation or even a bearish phase, since those recent buyers remain modestly underwater.

Institutional Appetite Returns

Beyond price action, several off-chain indicators suggest conditions are improving, albeit cautiously. Corporate treasury demand remains opportunistic and price-sensitive, providing downside support without driving the trend higher. U.S. spot Bitcoin ETF flows have turned positive again, signaling institutional buyers are dipping back into the market. Meanwhile, futures open interest is rebuilding gradually, suggesting risk appetite is returning without dangerous levels of leverage.

Derivatives markets are also showing signs of normalization. Implied volatility appears to have bottomed and is ticking up modestly, though it remains relatively compressed. Positioning is increasingly tilted toward call options, reflecting cautious optimism among traders. A recent record options expiry cleared roughly 45% of open interest, removing price-pinning effects and providing clearer signals on underlying sentiment as Bitcoin pushes deeper into 2026.

The setup is there. Now it's just a matter of whether demand can punch through that $99,000 ceiling and keep going.