Bitcoin's (BTC) aspiration to reach $100,000 encountered significant resistance, with spot demand exhibiting signs of exhaustion precisely as sellers became more active. Following a local peak near $98,000 on Wednesday, BTC experienced a retracement over two consecutive sessions, dipping below $95,000 by Friday's New York trading session.
Key Observations on Bitcoin's Price Action
- •Bitcoin's recent pullback was preceded by a decline in spot demand, which was evident in a weakening Coinbase premium.
- •Data indicates that previous rallies were fueled by aggressive buying activity, but this momentum lacked sustained follow-through.
- •Short-term holders engaged in selling, offloading over 40,000 BTC as the price approached their cost basis.
Bitcoin Spot Demand Falters at the Local High
The price correction coincided with a downturn in the Coinbase Bitcoin premium index. This metric briefly turned positive near the price peaks, signaling late-stage spot buying. However, the failure of the price to break higher suggests that larger buyers lacked sufficient conviction to sustain the upward movement.
Bitcoin's cumulative volume delta (CVD) displayed higher highs while the price formed a higher low. This divergence typically indicates that aggressive market buying is absorbing sell pressure, but without generating enough power to propel the price further upward.
Concurrently, the bid-ask ratio remained negative throughout the rally. This means that sell orders consistently outnumbered bids, even as the price increased, suggesting that buyers were actively lifting existing offers rather than establishing passive support levels.
Following a sharp, brief liquidation event, open interest also decreased in tandem with the price. This indicates that leveraged positions were flushed out, and new long positions were hesitant to enter the market, thereby reducing the momentum behind the price movement.
Market analysis firm Material Indicators observed that bears "fought back hard," with trend signals flipping on the daily chart. The firm cautioned that a breach of key trendlines could lead to a more significant test of support levels. However, a reclaim above $97,000 would serve to invalidate these recent bearish signals.
Related: Bitcoin rally collapses at $97K as funding rate stalls, retail traders sit out
Short-Term Holders Realize Profits Near Cost Basis
The recent price dip was also characterized by clear profit-taking activity from short-term holders (STHs). On January 6, when BTC reached $94,000, STHs transferred over 30,000 BTC to exchanges, realizing profits. This pattern repeated on January 15 as the price surpassed $97,000, with more than 40,000 BTC in profits being realized within a single day.
Although the STH discount has narrowed from -22% to -4% over the past two months, the price stalled just below the STH cost basis, which is situated near $98,300. With realized prices closer to $102,000, the behavior of STHs suggests that capital preservation remains their primary objective until stronger confirmation of an upward trend emerges.
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