Bitcoin is testing a significant on-chain cost base after its longest winning streak in recent months, and while stablecoin reserves are increasing, a decline in the Sharpe ratio is limiting any rebound.
summary
- Bitcoin extended its five-day winning streak and briefly broke recent intraday highs, but is still trading below key 6-12 month holder cost benchmarks.
- Analysts say that a return to on-chain levels would confirm a trend reversal, but failure would continue the downtrend and bearish bias after the October 2025 ATH.
- Binance’s stablecoin reserves and BTC-to-stablecoin ratio indicate a decline in purchasing power, but the decline in the Sharpe ratio suggests that the rebound is being driven by positioning rather than new demand.
Bitcoin (BTC) is testing a key resistance level this week that analysts say will determine the cryptocurrency’s next major trend, according to market observers.
Where will Bitcoin head towards 2026?
The digital asset briefly surpassed its recent intraday high on Jan. 6 after a fifth straight day of gains, marking its longest winning streak since early October 2025, according to data from CoinGecko.
Analysts noted that Bitcoin’s price is trading below a key on-chain metric, the average acquisition price of the coin, which last fluctuated six to 12 months ago. According to the analyst, historical data shows that when prices are below this cost basis, the overall trend tends to remain negative and further losses are likely.
“Right now, that cost basis is close to that threshold,” Crypto Dunn said. “After weeks of sideways movement, Bitcoin is showing early signs of a rebound, making this level an important benchmark to watch.”
Our analysis shows that crossing this threshold will result in a significant change, as it has historically signaled a transition from a bearish trend to a bullish trend. Failure to break above this would suggest that the downtrend that began after October’s all-time high is still active.
Bitcoin once again finds itself at critical levels.
In the past, when prices reached this area, the market either recovered or changed direction.
We are standing at the same spot again.
The reaction from here will be decisive.How do you read this? $Btc #Btc #Bitcoin pic.twitter.com/RHhiyIBijS
— CryptoELLTES (@CryptooELITES) January 6, 2026
This technical analysis is in line with the observations of analyst Dr. Proffitt, who previously noted that Bitcoin has broken through short-term resistance, paving the way for a higher price range.
Market data suggests that Bitcoin may be in a transition period. Analyst Dirkforst noted that Binance’s stablecoin reserves have increased significantly recently, indicating that capital on the sidelines is ready to support prices. The analyst said the ratio of Bitcoin to stablecoins on exchanges indicates an accumulation of potential purchasing power.
However, analyst BorisD observed that Bitcoin’s Sharpe ratio, which measures return to volatility, is declining despite the price increase. The analyst said this suggests the recent rally has been driven more by internal market mechanisms and short covering than by strong new demand from outside investors.
Cryptocurrency markets are monitoring whether Bitcoin can overcome key resistance levels amid intensifying price volatility.
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