Is Bitcoin's $97K Rebound a Genuine Breakout or a Fragile False Dawn?

Bitcoin's recent surge past $97,000 has reignited debates about the cryptocurrency's long-term trajectory. While institutional demand and macroeconomic tailwinds have fueled optimism, technical and on-chain metrics paint a more nuanced picture. This analysis examines whether the $97K rebound represents a sustainable breakout or a fragile false dawn, focusing on macroeconomic volatility and short-term market structure.

Macroeconomic Drivers: Tailwinds and Contradictions

The rally to $97K was initially driven by a confluence of factors. MicroStrategy's acquisition of 13,627 bitcoins at an average price of $91,519 underscored Bitcoin's growing appeal as a corporate treasury asset, while spot ETFs attracted $2.68 billion in net inflows, signaling renewed institutional interest. Additionally, expectations of Federal Reserve rate cuts in 2026 provided a bullish backdrop, as lower real yields typically reduce the cost of holding risk assets.

However, late December 2025 saw a sharp divergence between macroeconomic conditions and Bitcoin's price action. Despite softening U.S. inflation and dovish central bank policies, Bitcoin fell nearly 9%, with volatility spiking to levels last seen in April 2025. This disconnect highlights the fragility of the rebound, as weak ETF inflows and prolonged negative sentiment-reflected in the Crypto Fear & Greed Index-suggest lingering skepticism.

Technical Indicators: Momentum vs. Structural Weakness

Bitcoin's price action above $97K has been supported by its position above both the 50-day and 200-day moving averages, with trading volume surging 35% above the weekly average. Yet, technical indicators reveal critical vulnerabilities. The asset remains trapped in a falling channel, with resistance near $116K and a dense supply cluster between $106K–$118K capping rallies. A break above this range would be necessary to confirm a genuine breakout, but current momentum suggests otherwise.

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) further complicate the outlook. The RSI for BTC/USD sits in the mid-30s, indicating bearish momentum dominance, while the MACD has produced a bearish crossover, reinforcing the likelihood of continued downside pressure. Meanwhile, the Network Value to Transaction (NVT) ratio-a metric assessing Bitcoin's valuation relative to transaction volume-shows signs of stress, with reduced stablecoin inflows and increased spot selling.

On-Chain Metrics: Accumulation or Distribution?

On-chain data reveals a mixed picture. The realized market cap reached an all-time high, suggesting strong conviction among long-term holders. However, the STH (Short-Term Holder) Realized Profit-Loss Ratio fell below 0.21 near $100K, indicating that over 80% of realized value came from coins sold at a loss. This points to capitulation rather than accumulation, as traders exit breakeven positions.

Notably, Digital Asset Treasuries (DATs) added 42,000 BTC to their holdings in mid-December-the largest accumulation since July 2025-while miners faced declining network hash rates, a historically bullish contrarian indicator. Yet, the divergence between medium-term sellers and long-term holders remains a red flag, signaling a potential bottoming process rather than a confirmed reversal.

Macroeconomic Volatility: A Double-Edged Sword

Bitcoin's volatility in late 2025 was exacerbated by macroeconomic uncertainty. High real yields and fading risk appetite kept the asset hovering near $85K, with the 2-Year Simple Moving Average (SMA) at $82,800 acting as a critical support level. A monthly close below this threshold would historically signal an extended bearish regime. Conversely, a breakout above $94,236 could validate the $97K rebound as a genuine cyclical low.

The broader crypto market also reflected this volatility, with a $1 trillion wipeout in late 2025 despite Bitcoin's October 2025 all-time high of $126K. Events like Trump's 100% tariff announcement on China and the subsequent $19 billion liquidation event in October 2025 created a risk-off environment, compounding Bitcoin's fragility.

Conclusion: A Tenuous Equilibrium

Bitcoin's $97K rebound is a product of both macroeconomic optimism and technical fragility. While institutional adoption and ETF inflows provide a foundation for further gains, structural weaknesses-such as bearish divergences in RSI and MACD, weak on-chain demand, and a fragile support structure-suggest caution. The coming weeks will hinge on whether Bitcoin can reclaim the $116K resistance level or succumb to the $82,800 SMA. For now, the market remains in limbo, with the outcome dependent on renewed conviction from new entrants and a resolution of macroeconomic uncertainties.

Investors should monitor key levels and on-chain behavior closely. A sustained break above $116K could validate the rebound as a genuine breakout, while a failure to hold above $85K would likely extend the bearish consolidation. Until then, the $97K level remains a fragile false dawn, reflecting the broader tension between hope and reality in the crypto markets.