Bitcoin Faces Sell-Off but Demand Below $98,000 Suggests Potential for Future Gains

• Bitcoin’s recent price fluctuations, hitting resistance at $102,180 and igniting discussions on demand levels below $98,000, signal potential market dynamics.

• Investor sentiment remains bullish despite short-term sell-offs, as evidenced by significant inflows and outflows from major exchanges.

• Notably, analyst Burak Kesmeci comments, “Both metrics confirm that investor behavior on Binance is leaning toward accumulation,” underscoring the bullish outlook.

Amidst Bitcoin price fluctuations, heavy demand below $98,000 signals a potential rebound with investors accumulating on major exchanges.

Bitcoin investors on Binance hint at accumulation

Burak Kesmeci, a verified analyst at CryptoQuant, emphasized recent shifts in Bitcoin’s market dynamics. He noted that the 14-day simple moving average (SMA14) of Binance’s netflow has turned negative, a historical signal that has preceded bullish reversals in Bitcoin’s pricing structure. Each instance of a negative SMA14 has correlated with upward price movements, indicating that current market sentiment might be ripe for a rally.

Additionally, Bitcoin outflows on Binance reached 5,407 BTC, marking a significant uptick and the highest volume recorded in the past month. This surge signifies robust investor activity and aligns perfectly with Kesmeci’s analysis:

“Both metrics confirm that investor behavior on Binance is leaning toward accumulation. This trend strongly supports the case for upward movement in Bitcoin’s price over the short term.”

In tandem with the developments on Binance, US retail investors have also rejuvenated buying pressure. This is evidenced by the positive shift in the Coinbase premium index, which recently crossed above the SMA14, signaling a potential bullish trend. Historical data shows that when this index surpasses the SMA14, Bitcoin’s price has previously surged from $69,000 to $108,000 in Q4 2024, suggesting a similar outcome might be on the horizon.

Bitcoin should hold $98,000 to hit new ATHs

The euphoria surrounding Bitcoin’s ascent past $100,000 was temporarily disrupted as the price retraced. Yet, from a technical standpoint, this does not invalidate the prevailing bullish trajectory of the market. A key aspect influencing current price action is the liquidity pools—areas where traders execute limit orders, stop losses, and profit-taking—creating predictable oscillations in Bitcoin’s price movement.

As indicated in recent analyses, Bitcoin’s drop from above $102,000 to around $98,000 reflects movement between these liquidity pools. On January 6, BTC’s rise above $99,000 effectively cleared significant equal highs established in late December, subsequently leading to the recent price drop due to profit-taking in the supply zone.

Market behavior suggests that Bitcoin may revisit the equal lows around $97,377 and $96,700 before potentially bouncing back from the order block at $96,700. Therefore, maintaining a daily close in the range of $97,000 to $98,000 is critical for sustaining Bitcoin’s bullish outlook.

Prominent market analyst Michael Van de Poppe reinforced this sentiment, stating, “I’d like to see $98,000 hold. If that holds, then I’m expecting a new ATH to come.” Such sentiments echo the importance of maintaining strength at this pivotal price level as a precursor to subsequent all-time highs.

Conclusion

In summary, while Bitcoin’s recent volatility could cause concern for some investors, the underlying metrics indicate a strong potential for accumulation, especially from major exchanges like Binance. With key support levels at $98,000 holding significance for future price movements, BTC may very well be poised for a resurgence. Observers and investors alike should stay attuned to these developments, as they could herald Bitcoin’s advancing trajectory towards new all-time highs.