Bitcoin recovers from one-month low
Bitcoin has been under pressure of late, marked by a sharp sell-off from its mid-January $97,913.08 peak, followed by a minor recovery today.
The volatility underscores how sensitive the world’s largest cryptocurrency remains to shifts in macro sentiment, positioning and liquidity conditions, even as its longer-term narrative has strengthened since the beginning of the year.
The recent sell-off was triggered by a broader risk-off move across global markets. A sharp rise in government bond yields, renewed uncertainty over the timing and scale of future interest-rate cuts, and weakness in equity indices weighed heavily on risk assets.
Cryptocurrencies once again moved in tandem with these broader pressures, and Bitcoin slipped quickly as traders reduced exposure. Although Bitcoin is generally less volatile than many altcoins, its size and liquidity make it a primary vehicle for de-risking when sentiment turns abruptly.
Positioning dynamics amplified the move. In the days leading up to the decline, derivatives data suggested that speculative long exposure had rebuilt as traders positioned for a continuation of January’s rally. When prices failed to extend higher and instead broke back below short-term technical support zones, stop-loss orders were triggered and liquidations accelerated. This mechanical unwinding of leveraged positions pushed Bitcoin lower than spot selling alone might have justified, reinforcing the speed and intensity of the drop.
Institutional behaviour also played a role in shaping the move. Since mid-January, spot Bitcoin exchange-traded fund (ETF) flows have been mixed, with inflows during periods of strength offset by renewed outflows when volatility spikes. During the sell-off, the absence of aggressive dip-buying from large institutions in the initial phase left prices exposed, as market participants reassessed near-term risk rather than adding exposure immediately.
Despite the sharp decline, the Monday’s recovery suggests that underlying demand remains intact. Longer-term investors appear more willing to absorb supply at lower levels, viewing the move as a correction driven by positioning and macro shocks rather than a breakdown in Bitcoin’s structural outlook. This helped prices stabilise and rebound, even if the recovery has so far been measured rather than decisive.
Macro dynamics remain central to Bitcoin’s near-term direction. As bond yields eased and broader markets found some footing, Bitcoin benefited from a modest recovery, highlighting its continued sensitivity to global financial conditions. However, the rebound has lacked the momentum seen earlier in January, reflecting lingering caution after the speed of the sell-off and ongoing uncertainty around monetary policy and growth.
Geopolitical factors and regulatory narratives have continued to provide a supportive backdrop, but they have not been sufficient to fully offset short-term risk aversion. Bitcoin’s role as both a speculative asset and a potential hedge means it can attract interest during periods of stress, yet it remains vulnerable when liquidity tightens and leverage is unwound.
Taken together, this week’s price action illustrates Bitcoin’s current balancing act. On one side, improving regulatory clarity, ongoing institutional engagement and resilience above key support levels point to a market that is structurally healthier than during previous downturns. On the other, sharp swings driven by macro shocks and leveraged positioning show that volatility remains an inherent feature of Bitcoin’s path.
Looking ahead, Bitcoin’s near-term trajectory will likely depend on whether broader market conditions stabilise and whether buyers can build on the recovery without renewed selling pressure.
For now, the sharp sell-off and subsequent minor rebound serve as a reminder that even in a more mature phase of the cycle, Bitcoin remains highly responsive to shifts in sentiment, liquidity and risk appetite.
Bitcoin bearish case:
Bitcoin’s bearish trend reversal marginally below the key $98,330.30 – $100,762.58 mid-May to November resistance area provoked a sell-off, so far to Sunday’s $86,013.03 low.
While the $89,226.00 – $91,143.38 resistance area caps, overall downside pressure remains in play.
A fall through $86,013.03 would probably push the early December $83,871.20 low to the fore, a fall through which would likely engage the November low at $80,619.71.
Bitcoin bullish case:
In the first instance Bitcoin needs to break through its $89,226.00 – $91,143.38 resistance zone but even if it does, the $94,095.33 – $94,766.54 resistance area may thwart the upside. It contains the mid-November low and the December and January highs and would need to be overcome for the more significant $98,330.30 – $100,762.58 resistance zone to be back in sight.
For the bulls to be fully back in control, the 11 November high at $107,461.75 would need to be bettered.
Short-term outlook:
Bearish while below resistance at $89,226.00 – $91,143.38 $94,095.33 – $94,766.54.
Medium-term outlook:
Neutral with a bearish bias while trading below the $94,095.33 -$94,766.54 resistance area but above the $80,619.71 late November low.