Bitcoin’s recent attempt to breach the $100,000 mark encountered significant resistance, as spot traders began to lose momentum and short-term investors opted to cash in their gains. The cryptocurrency hit a local peak near $98,000 on Wednesday but subsequently experienced a two-day decline, dropping below the $95,000 threshold by Friday’s New York trading session.
Key Insights:
The pullback in Bitcoin prices followed a noticeable decline in spot market demand, as indicated by a decreasing Coinbase premium. Although there was an initial surge driven by aggressive buyers, the lack of sustained interest prevented any further upward movement.
Short-term investors took advantage of the rally, selling over 40,000 BTC as the price approached their cost basis.
Spot Demand Falters at Peak:
The downturn coincided with changes in the Coinbase Bitcoin premium index, which briefly turned positive near the recent highs, implying a late surge in spot buying. However, the inability to break higher suggested a lack of significant follow-through from major buyers.
Bitcoin’s cumulative volume delta (CVD) showed higher highs while prices formed a higher low, a divergence indicating strong market buying absorbing sell pressure but insufficient to drive prices up. The bid–ask ratio remained negative throughout the rally, indicating that sell orders continued to surpass bids, with buyers lifting offers rather than providing passive support.
After a brief wave of short liquidations, open interest decreased along with the price. This indicated a clearing of leverage and a hesitance from new long positions, resulting in diminished momentum.
Market analysis firm Material Indicators observed that bears “fought back hard,” with trend signals changing on the daily chart. They cautioned that losing key trendlines could lead to further support testing, though a recovery above $97,000 would negate the bearish signals.
Short-term Holder Profit-Taking:
The decline was also marked by profit-taking from short-term holders (STHs). When BTC reached $94,000 on January 6, STHs transferred over 30,000 BTC in profit to exchanges. This pattern repeated as prices exceeded $97,000, with more than 40,000 BTC in profits realized in a single day.
Despite the STH discount narrowing to -4% from -22% over the last two months, prices stalled just below the STH cost basis around $98,300. With realized prices near $102,000, STH behavior indicates a focus on capital preservation until a more definitive upward trend is confirmed.