Bitcoin briefly reclaimed the $110,000 mark on Tuesday, but analysts warned the market structure remains weak, with traders showing reluctance to take on fresh risks.

Market Recovery Meets Caution

Bitcoin rose 2.4% in the past 24 hours to reach $110,495, bouncing from Monday’s low of $107,300. The rebound sparked optimism that a local bottom had been found. However, blockchain analytics firm Glassnode noted that broader market conditions still pointed to fragility, highlighting subdued demand and risk-averse positioning.

Trading volumes in the spot market fell by 9% over the past week, dropping from $8.5 billion to $7.7 billion. According to Glassnode’s Weekly Market Pulse report, this decline reflects waning investor participation and weaker conviction. Despite a modest improvement in the spot Cumulative Volume Delta, signalling easing selling pressure, demand remains unconvincing.

Futures Market Turns Defensive

The futures market echoed this cautious mood. Open interest slipped from $45.8 billion to $45 billion, suggesting moderate unwinding of positions. At the same time, funding rates fell from $3.8 billion to $2.8 billion, signalling reduced appetite for leveraged long exposure.

“Traders appear less willing to extend risk, underscoring a defensive stance after recent volatility,” Glassnode said. Institutional activity was also muted, with demand from large investors falling to its lowest level since April.

Key Price Levels in Focus

Bitcoin is currently testing resistance at the upper boundary of a descending channel around $110,500. Analysts suggest that a daily close above this level could pave the way for a breakout towards the $110,000 to $117,000 liquidity zone, where both the 50-day and 100-day simple moving averages converge.

Support lies around $108,000 and $107,300, with a deeper safety net at $105,300. If these levels fail to hold, Bitcoin could slide towards the psychological $100,000 threshold.

Michael van de Poppe, founder of MN Capital, argued that a clear break above $112,000 is essential to set the stage for fresh all-time highs. Without it, he warned, Bitcoin could revisit the $103,000 region, presenting a potential buying opportunity.

Liquidity Hunt Ahead

The liquidity map showed dense clusters between $110,000 and $111,000, as well as in the $105,500 to $107,000 range. Such areas often act as magnets for price movements, either triggering reversals or extending sell-offs.

“Looks like they are coming for that big cluster of shorts 110K-111K, then likely back to run the Monday low and the longs from the weekend,” analyst AlphaBTC posted on X.

To sustain upward momentum, Bitcoin needs to reclaim the 20-day exponential moving average at $112,500. Failure to do so could see the price drop back towards $105,000 and potentially $100,000, analysts said.