Bitcoin's $98K Breakout: Supply/Demand Test at $96K

Bitcoin's move above $95K was a clean breakout, not a fakeout. The price punched through that two-week ceiling, briefly touching $98K and shifting the entire supply/demand dynamic. The key resistance at $95K is now the critical support zone, with the $94.5K-$96K range acting as the new battleground. This flip is a classic structural shift-the line that once rejected buyers now holds the line for them.

Now the market is compressing, and the battle for control is clear. Sellers are actively defending the $97K area, repeatedly stepping in to cap rallies. Meanwhile, buyers are absorbing supply near $95K, preventing a deeper pullback. This tight range between active shorts overhead and late longs trapped beneath is a classic "pause after impulse" phase, where liquidity builds on both sides before the next decisive move.

The catalyst for this shift in supply is massive. It followed a sharp reversal from $681 million in ETF outflows to over $1.7 billion in inflows in just a few days. That institutional supply shift is real. Combined with exchange balances falling to 1.8 million BTC, the lowest level since 2017, the available trading supply has tightened dramatically. This is a powerful structural tailwind.

The setup now hinges on which side gets forced to unwind first. The $94.5K-$96K zone is the make-or-break support. Holding there preserves the bullish breakout structure and keeps the path toward $100K intact. A break below would signal sellers have regained control. For now, the buyers are defending, but the compression means the next move is likely to be decisive.

ETF Flows and On-Chain Supply: The Bullish Catalysts

The rally is built on a clear supply/demand imbalance. The fundamental catalyst is a massive shift in institutional demand, quantified by the spot Bitcoin ETF flows. In just the past few days, inflows have surged past $1.7 billion. The single-day peak on January 15 hit a record $843.6 million, a stark reversal from the $681 million in outflows that started the year. This isn't just a trend; it's a structural absorption of supply. BlackRock's IBIT alone pulled in over $648 million in a single day, leading the charge.

That demand is directly tightening on-chain supply. As institutions bought, coins moved out of trading venues. Exchange balances have fallen to $1.8 million BTC, the lowest level since 2017. Fewer coins sitting on exchanges means less available supply for sellers, creating a classic supply tightness dynamic. Every dollar of ETF inflow is a dollar of liquidity being removed from the open market.

From a technical trader's view, this is the fuel for the breakout. The institutional demand has absorbed the selling pressure that capped the price for weeks. It's a powerful tailwind that shifted the market structure from consolidation to extension. The battle now is about whether this demand can continue to outpace any new supply, or if the compressed range will see a squeeze play. For now, the numbers show a clear bullish bias.

Technical Levels and Volume Profile

The immediate battleground is clear. Bitcoin is testing the $94,253 support level after a brief stall near $98K. This zone, roughly the $94.5K-$96K range we identified earlier, is the make-or-break line. Holding here preserves the bullish breakout structure. A break below would invalidate the recent extension and likely trigger a deeper pullback.

The next major technical level is the 50-day Exponential Moving Average (EMA) at $92,207. That's the primary fallback if the $94K-$96K zone fails. It's a key long-term support that has held firm through previous cycles. A test of this level would signal a significant shift in momentum, forcing traders to reassess the trend's integrity.

On the upside, the path to the next psychological target is straightforward. A clean break above the $98K resistance would clear the immediate overhead supply. That move would set the stage for a direct shot at $100,000. Analysts are already optimistic, with some calling the asset undervalued and pointing to the $100K level as the next significant resistance. Prediction markets and technical setups are leaning bullish for that move.

Momentum indicators are rebuilding, which is crucial. The Relative Strength Index (RSI) on the 4-hour chart reads 65, well above neutral and showing bulls still have control. The Moving Average Convergence Divergence (MACD) shows a bullish crossover that remains intact. This confirms the underlying strength. For the uptrend to continue, Bitcoin must hold above the $95K key level. That keeps the momentum intact and the $100K target in play.

The volume profile supports this setup. The breakout above $95K was accompanied by expanding volume, signaling conviction from spot buyers. This absorption of supply is what allowed the price to move higher without a liquidity spike. The current compression is a pause for breath, building the next decisive move. The technicals show a clear path: defend the $94K-$96K zone, hold the $95K level, and the next target is $100K.

Trading Implications and Risk Management

The setup is clear. The breakout above $95K is intact, but the market is pausing to test the new support. For traders, this is about defining risk and watching the catalysts that will force the next move.

The key risk is a breakdown below the critical $94,253 support level. That zone, roughly the $94K-$96K range, is the make-or-break line. A clean break below would invalidate the bullish structure and likely trigger a deeper pullback. The immediate target for sellers would be the 50-day EMA at $92,207. A test of that level would signal a significant shift in momentum. The next major support is the $90K zone, which would be the fallback if the trend breaks down further. This is the primary stop-loss zone for any long position.

On the flip side, the bullish path is straightforward. To keep the uptrend alive, Bitcoin must hold above the $95K key level. A clean break above the recent $98K resistance would clear the immediate overhead supply and set the stage for a direct shot at the next psychological target: $100,000. That level represents the next significant resistance and the primary upside target for a continuation.

Now, the catalysts to watch are the real-time signals of supply and demand. First, monitor ETF inflows. Sustained institutional demand is the fuel for this rally. A reversal to outflows would pressure price and undermine the bullish thesis. The recent surge past $1.7 billion in inflows over three days is a powerful bullish signal; watch for that flow to continue. Second, watch $exchange balance levels. A spike in coins moving onto exchanges would signal increased selling pressure and could act as a headwind. The recent drop to 1.8 million BTC, the lowest since 2017, is a key bullish factor; any reversal in that trend would be a red flag.

For risk management, the plan is simple. Enter longs with a stop-loss just below the $94K-$96K support zone. This protects capital if the buyers fail to defend. The target is $100K, with a secondary target at $92,207 if the trend breaks down. The technicals show a clear path, but the market is testing the strength of the new support. The next decisive move is coming.