Bitcoin Price Approaches $95K Resistance: Are Warning Signs Present?

Bitcoin's price is moving closer to the $95,000 mark, despite signs that risk-adjusted returns may be weakening.

Key Takeaways

Bitcoin’s price is climbing toward the $95,000 resistance level, currently at $93,810.
Recent trading activity has seen significant increases in both Bitcoin trading volume (33.8%) and derivatives volume (43%).
The Sharpe ratio is declining, indicating weakening risk-adjusted returns despite rising prices.
Market cycle indicators suggest a cooling phase rather than extreme capitulation, with on-chain data revealing stable long-term holders.
Technical analysis shows Bitcoin is trying to stabilize, but faces resistance from moving averages above $95,000.

Chart showing Bitcoin price rise

As of this report, Bitcoin is valued at $93,810, marking a 1.4% increase in the last 24 hours and continuing its ascent toward the major resistance level of $95,000. The top cryptocurrency is still approximately 25% below its peak from September, when it reached $126,080.

The recent upswing has resulted in a 7.5% price increase over the past week and a 4.5% rise over the past month. Alongside this move, trading activity has surged, with Bitcoin's trading volume climbing by 33.8% to reach $50.58 billion in the last 24 hours, indicating increased market participation as prices rise.

Data from CoinGlass regarding derivatives reveals a similar trend. Derivatives trading volume increased by 43% to $85 billion, while open interest rose 2.56% to $61 billion. This rise in volume outpacing the growth in open interest suggests active market positioning and rotation rather than aggressive leveraging.

Weakened Risk Efficiency Indicated by Sharpe Ratio

An analysis dated January 6 by CryptoQuant contributor BorisD has revealed that Bitcoin's Sharpe ratio is exhibiting a peculiar pattern. While the price goes up, the one-year return remains negative, and the Sharpe ratio is on a downward trend.

Historically, robust price movements were accompanied by rising Sharpe ratios, indicating effective returns in relation to volatility. Typically, when prices hit market lows, volatility decreases as returns hit their lowest.

However, the current situation appears different. While volatility is increasing, returns are not keeping pace. From a risk-adjusted perspective, the upward move looks inconsistent. Rather than being sustained by ongoing demand, this recent advancement appears to be influenced more by position adjustments and short-term inflows. Such behavior often indicates that the market is at a crossroads, testing its next directional move rather than establishing a clear trend.

Market Cycle Indicators Suggest Cooling Phase

A separate analysis by CryptoZeno points to the current market conditions resembling a cooling phase. The Bull–Bear market cycle indicator has rolled over after reaching high levels, signifying slowing upward momentum. Importantly, the indicator has not dipped into the deeply negative territory that would typically indicate capitulation. Meanwhile, longer-term trend indicators continue to remain above thresholds that defined previous prolonged bear markets.

On-chain metrics support this narrative. Long-term holders maintain stability, while the profitability of short-term participants is starting to decline. This balance is typical during consolidation periods, where price volatility rises, but market conviction wanes.

Technical Analysis of Bitcoin Price

From a technical perspective, Bitcoin is working to re-establish its structure following a significant pullback. The price has once again crossed above the 10-day and 50-day moving averages, which are both trending upward.

However, BTC continues to trade below the 100-day and 200-day moving averages, which fall between $96,000 and $106,000, acting as barriers to further rallies despite the recent gains.

Bitcoin price rises toward $95K resistance — is this crucial ratio flashing a warning? - 1

Momentum indicators are sending mixed signals. The relative strength index is at 65, showing signs of strengthening; however, the Williams %R and stochastic RSI are nearing 99, indicating the possibility of an overextended move soon.

Diminishing momentum and a Commodity Channel Index (CCI) above 230 suggest that the current rally is losing steam as it meets resistance.

Bollinger Bands indicate that the price is moving away from the lower band following a bounce near $84,500, with BTC trading in the upper half of the range. This pattern aligns more with mean reversion rather than a breakout scenario.

If Bitcoin can maintain its position above the $92,000–$93,000 range and consolidate, a clear surge past $95,000 could refocus efforts on reaching the $100,000 milestone. Conversely, failure to sustain these levels would shift attention back to the $90,000 mark and the $88,500 area, where short-term moving averages converge.