BTC Price Tests $92K Support Amid Liquidations; Reversal Indicators Hint at Recovery

Bitcoin's price has recently tested the $92,000 support level amidst significant market liquidations. Although the price dipped following a rally, signs of potential recovery are emerging as technical indicators and market sentiment stabilize.

Key Takeaways

Bitcoin briefly dropped below $92,000 due to $440 million in liquidations.
The price dipped to $91,540 before recovering to approximately $92,670.
Short-term traders took profits after a nearly 12% rally.
Nearly $441.5 million worth of positions were liquidated recently.
Institutional investors are withdrawing from Bitcoin ETFs, with outflows totaling $243 million.
A double bottom pattern and strong technical indicators suggest potential for recovery toward $99,000.

BTC price tests $92K support as liquidations mount, but reversal setup signals recovery.

Current Market Analysis

On Monday, Bitcoin's price momentarily fell below the significant support level of $92,000, coinciding with a market hit of around $440 million in liquidations. Following a remarkable rally that brought Bitcoin to a 7-week high of nearly $94,400 on Tuesday, the price faced a sharp decline to $91,540. However, it managed to recover some losses and is currently trading at $92,670.

Analysts attribute the pressure on Bitcoin's price to profit-taking by traders after the sharp rebound from late December lows. With the price having surged nearly 12% from its lows near $84,500, many short-term traders opted to lock in their gains.

In addition to this profit-taking, the BTC price experienced downward pressure from substantial liquidations, which often amplify declines. Data from CoinGlass indicates that about $441.5 million in positions were liquidated within the last 24 hours, with $288.02 million stemming from long positions. When these long positions are liquidated, the exchanges automatically close trades, which heightens selling pressure and quickly drives prices lower.

Compounding this bearish sentiment, institutional investors have retreated from the market just days after BlackRock’s IBIT ETF noted its largest inflows in over three months. As a result, the 12 Bitcoin ETFs have transitioned back to net outflows, losing $243 million over the past day, according to data compiled by SoSoValue.

Despite these challenges, Bitcoin's swift recovery above $92,000 indicates a resilient underlying market structure. The Crypto Fear and Greed Index has stabilized at a neutral level of 49, suggesting that the recent dip acted more as a necessary liquidity reset rather than a panic-fueled sell-off.

On the daily chart, Bitcoin has formed a double bottom pattern, a bullish reversal formation that typically signals forthcoming short-term rallies once validated. However, the price failed to maintain its movement past the $94,480 resistance line of this pattern, leading to a minor rejection.

BTC price has formed a double bottom pattern on the daily chart — Jan. 7 | Source: crypto.news

Nonetheless, technical indicators indicate underlying strength. The Aroon Up remains elevated at 85.71%, while the MACD lines have crossed above the zero line and are trending upwards, signaling bullish momentum.

Should Bitcoin successfully break out of its current resistance, bullish traders could reclaim the $99,000 level. Conversely, failure to surpass the $94,400 resistance may lead to a price retracement towards the $85,000 to $88,000 range, a critical support level established during the December correction.