Bitcoin's price action is showing signs of consolidation under significant bearish pressure, with the cryptocurrency currently trading around $89,463. The price is compressed between key technical levels: the 20-day Exponential Moving Average (EMA) at $91,241 acting as resistance and an ascending channel support near $88,000.
Prediction markets are reflecting elevated downside expectations. Data from Polymarket reveals that traders are assigning a 27% probability that Bitcoin will drop to $85,000 before the end of January. This represents a notable decline from earlier odds of 44%, yet still indicates substantial bearish sentiment. In contrast, the odds for a rally to $100,000 stand at a mere 4%.
The derivatives market tells a conflicting story, however. Over the past 24 hours, short liquidations have dominated, totaling $85.33 million. This suggests that bearish positioning may have become overcrowded, creating a potential setup for a counter-trend move that could squeeze these short positions.
Bitcoin's price has extended its losses, dipping below the $88,500 support level. It found a temporary low at $86,007 before attempting a minor recovery wave. The cryptocurrency is now trading below $88,200 and the 100-hour Simple Moving Average, with a new bearish trend line forming with resistance at $88,000 on the BTC/USD hourly chart.
Key technical levels are now in focus. For a recovery to gain traction, Bitcoin needs to settle above the $88,500 resistance zone, which aligns with the 50% Fibonacci retracement level of the recent downward move from $91,099 to $86,007. A close above this level could pave the way for a test of $89,200 and potentially $90,000. Conversely, failure to break above $88,500 could trigger another decline, with immediate support at $86,700, followed by major supports at $86,200 and $85,500. A break below these levels might see Bitcoin target the $83,500 and $82,500 support zones.
Technical indicators are leaning bearish. The hourly Moving Average Convergence Divergence (MACD) is losing pace but remains in the bearish zone, while the Relative Strength Index (RSI) is below the neutral 50 level, indicating weakened momentum.
