Bitcoin Volatility Increases: Should Traders Reevaluate BTC's Journey to $100K?

Bitcoin Volatility Rises as Traders Reassess the Path to $100k

Summary:
Bitcoin experienced a significant drop of 5.67% from its recent high of $97.9k on January 14, leading to a temporary retracement phase. Despite the challenges, analysts note signs of resilience in the market, with renewed optimism from institutional traders and bullish signals in derivatives data.

Key Takeaways:

Bitcoin fell from $97.9k to $94.5k, indicating a need for market reassessment.
The options market shows bullish positioning, with a Put/Call Ratio of 0.71.
Institutional investors and Bitcoin whales from December remain firm amid current price fluctuations.
Recent derivative market data indicates a potential upward trend.
The 4-hour chart suggests Bitcoin is testing key support levels for a possible recovery.

Current Market Dynamics

Bitcoin [BTC] saw a decline of 5.67% from its local peak of $97.9k on January 14. Following a sell-off on January 19, the cryptocurrency entered a short-term retracement phase. It lost the $94.5k local resistance, a critical level that bulls have attempted to reclaim since mid-November. However, despite these setbacks, some positive signals have emerged for the leading cryptocurrency.

On January 16, crypto analyst Maartunn highlighted that an impressive 41,800 Bitcoin were sent to exchanges within a 24-hour period. This was indicative of profit-taking activity at a time when BTC was approaching the short-term holder's cost basis of $99,470. The analyst noted that, as long as BTC remains below this cost basis, the current rally should be viewed as a bear market rally rather than the onset of a new bullish trend.

Evaluating Bitcoin's Resilience

Recent insights from AMBCrypto indicate a renewed sense of optimism in the options market, where the Put/Call Ratio was recorded at 0.71, showcasing a bullish sentiment among traders. Notably, Bitcoin whales who made purchases in December at a cost basis between $90k and $92k have shown no signs of capitulation. Institutional demand remains robust, with strong ETF flows noted over the previous week, including a notable increase on Monday after a four-day positive performance.

Bitcoin Buy Sell Index
Source: Axel Adler Jr Insights

Additionally, data from the derivatives market demonstrated a bullish trend. The Buy/Sell Index shifted from negative values on January 12 to a sustained positive range by the end of the previous week. Analyst Axel Adler Jr commented on this shift, noting that the overall weekly balance of derivative flows was favorable and led to a consistent influx of buyers, bolstering upward trends and enhancing the likelihood of continued price increases.

Impact of Recent Sell-off on Bullish Sentiment

Bitcoin 4-hour Chart
Source: BTC/USDT on TradingView

A look at the 4-hour chart suggests that the current swing structure remains bullish. Despite facing a notable retracement, BTC is testing the key support level at 78.6%, which is approximately $91,154. While the Money Flow Index (MFI) indicates considerable selling pressure and downward momentum at the time of writing, there remains potential for a bullish recovery if the support around $91.1k holds firm.

Conclusion

As Bitcoin navigates through this recent volatility, traders are urged to reconsider their strategies. The mixed signals in the market indicate both risks and opportunities, emphasizing the need for close monitoring of key levels and market trends.