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- Bitcoin is stuck below $100,000, and traders wait for a breakout while short squeeze speculation grows.
- The Federal Reserve’s stance on interest rates and on-chain data indicate a possible bearish phase.
Bitcoin remains locked in a tight trading range as market participants seek a catalyst for a breakout. Despite strong investor confidence, price movement has stagnated, leaving traders uncertain about the next trend direction. Meanwhile, concerns over macroeconomic factors and exchange flows add to the cautious sentiment.
As reported by CNF, Bitcoin continues to trade within a narrow price corridor, failing to establish $100,000 as a firm support level. Since reaching all-time highs in mid-January, BTC/USD has struggled to gain momentum, with traders closely watching key support and resistance levels.
Market sentiment suggests that if Bitcoin revisits its range lows around $91,000, further downside toward $88,000 could follow. Analysts highlight the risk of stop-loss liquidations triggering a deeper correction. However, some traders remain optimistic, pointing to upside liquidity targets near $99,200 and a potential move toward $102,500.
Liquidation data indicates that short positions could be squeezed in the near term, leading to a sudden price surge. With liquidity clustered above the current range, many traders anticipate Bitcoin could soon test higher levels. Some projections suggest a possible wick to $105,000, while others warn of a final flush into the $80,000 range before resuming an upward trend.
Macroeconomic Factors Weigh on Market Sentiment
Bitcoin’s price action is unfolding against a backdrop of cautious macroeconomic conditions. The upcoming release of the Federal Reserve’s January meeting minutes could reinforce expectations of a hawkish stance, further delaying anticipated interest rate cuts.
Current market projections indicate a mere 2.5% probability of a rate cut in March. Inflation has remained persistent, forcing investors to reassess risk exposure. Additionally, rising jobless claims are adding to concerns about economic stability. Despite these factors, risk assets, including Bitcoin, continue to trade near record levels.
The combination of tightening liquidity and shifting investor sentiment may influence Bitcoin’s short-term trajectory. Traders are closely monitoring the Fed’s policy direction, as any indications of easing could provide the market with a fresh boost.
Exchange Flows Signal Potential Market Shift
On-chain data reveals shifting trends in Bitcoin exchange activity, signaling a potential transition into a bearish phase. The Inter-Exchange Flow Pulse (IFP), which tracks Bitcoin movements between spot and derivative exchanges, has turned negative. Historically, a downtrend in this metric has preceded periods of price weakness.
When traders transfer large amounts of Bitcoin to derivative exchanges, it often signals bullish sentiment as investors open long positions. Conversely, increased movement from derivatives to spot exchanges suggests that traders are reducing risk exposure, which can lead to selling pressure.
Despite this warning sign, overall Bitcoin demand remains strong. Accumulation trends indicate that long-term investors continue to hold their positions, suggesting confidence in Bitcoin’s long-term potential. The ratio of exchange inflows to outflows has remained in a high-demand zone, reinforcing the notion that buyers are still active despite recent price stagnation.
Profit Metrics Indicate Bitcoin’s Market Cycle is Advancing
Long-term holder behavior is providing additional insights into Bitcoin’s price cycle. Net Unrealized Profit/Loss (NUPL) data shows that this investor group has increased selling activity in recent months. The metric, which tracks unrealized gains and losses, has remained in a historically significant zone that has previously signaled market tops.
Periods of euphoria, where long-term holders realize profits at an accelerated pace, have marked the peaks of previous Bitcoin cycles. While the current reading suggests Bitcoin is approaching a later stage in its cycle, past patterns indicate that these phases can last for months before a definitive top is reached.
