Bitcoin Holds $98K, Institutions Buy the Dip

Bitcoin (BTC) price maintained the $98,000 level on Tuesday, following a volatile Monday that saw the cryptocurrency dip below the $100,000 mark. Despite the recent market turmoil, signs of a rebound have emerged, with Bitcoin's price stabilizing and institutional investors continuing to show interest in the asset.

The recent drop in Bitcoin's price has put a significant portion of its supply held by short-term holders (STH) into the red. At $97,000, approximately 11% of STH supply was in loss, the highest exposure since early January. This metric highlights the precarious position of short-term traders who bought into the market at elevated prices and were caught off guard by the swift downturn.

In contrast, long-term holders (LTHs) have shown resilience, with less than 0.01% of their supply in loss. However, the share of unrealized profit held by LTHs has been declining since November and is now at its lowest point since September. This trend suggests that while LTHs are not selling in a panic, they are also not aggressively accumulating at current price levels. If Bitcoin continues to slide, LTHs reinvesting could indicate renewed confidence in the asset's long-term value and provide some stability.

Market sentiment has hit extreme bearish levels, with a wave of criticism crashing across crypto social media channels. However, this extreme position can often act as a contrarian indicator, suggesting that the digital currency may be undervalued. Some analysts believe the steep sell-off was a coordinated effort to force retail traders to liquidate their positions, allowing "strong hand" traders to buy up Bitcoin and Ethereum at bottom prices.

Despite the market downturn, institutional investors seem to be capitalizing on lower prices. Between January 27 and January 31, 2023, Bitcoin spot exchange-traded funds (ETFs) saw a net inflow of $560 million. BlackRock's Bitcoin ETF (IBIT) alone pulled in $751 million during that time. These trends suggest that large institutional players are well-positioned and bullish on Bitcoin despite its volatility.

The immediate future of Bitcoin is uncertain, with its price movement largely dependent on how short-term holders behave. If BTC goes down further, long-term holders might step in to stabilize the market