Bitcoin’s recent attempt to ascend toward the $100,000 mark encountered significant selling pressure, leading to a retracement below $95,000 by Friday. The rally appeared to be driven by intense buying activity earlier in the week, but key indicators signaled waning enthusiasm among investors. The price’s failure to sustain higher levels raises questions about the strength of current bullish momentum and the potential for a deeper correction.
Key Observations
- •Bitcoin’s rally was fueled by aggressive buying, but upward momentum lacked follow-through.
- •Spot demand momentum weakened, evidenced by a decline in the Coinbase Bitcoin premium index.
- •Profit-taking by short-term holders intensified near recent highs, with over 40,000 BTC liquidated on Thursday.
- •Market signals suggest traders are cautious amid diverging technical indicators and waning leverage.
Market Analysis
The correction coincided with a notable shift in the Coinbase Bitcoin premium index, which briefly turned positive near the local highs, indicating late-stage buying from larger market participants. However, despite this uptick, Bitcoin failed to push beyond the $98,000 resistance level, hinting at limited broader demand. Meanwhile, Bitcoin’s cumulative volume delta (CVD)—a metric measuring net trading flow—continued to show higher highs, indicating persistent buying pressure. Yet, the price formed a lower high, signaling a divergence that often precedes a reversal.
The bid–ask ratio suggested ongoing selling pressure, with sell orders surpassing bids throughout the rally. This situation implies that upward moves were supported primarily by lifts of offers rather than the creation of genuine demand. Following a swift liquidation event that reduced open interest, traders appeared hesitant to re-enter long positions, further dampening upside momentum.
Market analysis firm Material Indicators highlighted that bearish signals gained strength on the daily chart, warning that losing critical trendlines could pave the way for more significant support tests. However, a reclaim above $97,000 would likely invalidate the recent bearish outlook and re-establish bullish control.
Profit-Taking and Short-Term Holding Behavior
Profit-taking among short-term holders intensified around recent highs. Notably, on Thursday, following Bitcoin’s rise past $97,000, over 40,000 BTC were moved to exchanges in profit, suggesting traders are locking in gains rather than accumulating new positions. Despite the narrowing discount of short-term holders—improving from -22% to -4%—the cryptocurrency’s price remains just below their break-even point of approximately $98,300. This behavior underscores a cautious stance, with traders prioritizing capital preservation until clearer upward confirmation emerges.
Overall, the current environment reflects a market in a cautious pause, with technical signals warning of potential downside risk if key levels are not reclaimed. Investors are advised to monitor technical developments closely as Bitcoin navigates this critical juncture.