Is Bitcoin's Recent Breakout Attempt a Failed Auction Setting Up a High-Probability Short-Term Bearish Reversal?

Bitcoin's recent price action has sparked intense debate among traders and analysts, particularly following its failed breakout attempt above $90,000 in December 2025. This critical juncture has raised questions about whether the market is structurally weak or merely consolidating ahead of a larger move. By dissecting technical indicators, liquidity dynamics, and institutional flows, this analysis evaluates whether the failed breakout constitutes a high-probability bearish reversal setup.

Technical Indicators Signal Structural Weakness

Bitcoin's inability to sustain a close above $90,000 has been accompanied by bearish technical signals. A key observation is the emergence of a hidden bullish RSI divergence on the 4-hour chart, where price formed a higher low while momentum registered a lower low. While this divergence suggests a potential pause in the decline, it does not confirm a bullish reversal. Instead, it underscores the fragility of the current price structure.

The death cross formed in mid-November-when the 50-day moving average fell below the 200-day average- continues to weigh on medium-term sentiment. Meanwhile, Bitcoin remains confined within a tight intraday range, with the $90,000–$92,000 zone acting as a medium-strength support area influenced by round-number psychology. Deeper validation is seen in the $85,000–$87,000 range, where multiple touches and rising volume have reinforced its significance. The $80,000 level, a former resistance-turned-support, remains a critical psychological barrier. A breakdown below this level could expose liquidity in the $75,000–$80,000 range, historically a key support cluster.

Liquidity Dynamics Expose Market Fragility

Order-book liquidity has been a persistent concern. As of early 2026, Bitcoin's median order-book depth sits at $20 million to $25 million on each side, with over 70% of liquidity concentrated on Binance. This centralization creates systemic fragility, as macroeconomic shocks or large fund rebalancing could trigger sharp price swings. During the failed $90,000 breakout in December 2025, BTC order-book depth at ±200bps stood at $606.6 million, a 30% drop from its 2025 peak. This contraction, coupled with ETF outflows and an "underwater supply wall" between $93,000 and $120,000, has created a ceiling that hinders upward momentum.

Derivatives markets further highlight the lack of conviction. Funding rates for BTC futures remain near neutral, while short positioning in both BTC and ETH has intensified. This suggests that traders are hedging against downside risk rather than committing to a bullish thesis.

Institutional Flows and ETF Volatility

Institutional flows have increasingly driven Bitcoin's price action, with ETFs and corporate treasury buying overshadowing retail demand. However, December 2025 saw significant net outflows from BTC ETFs, a temporary setback for structural demand. Long-term holders (LTHs) have begun accumulating again, adding 3,784 BTC in late December after months of net distribution. While this signals a potential bottoming process, it is not yet enough to offset the bearish bias from short-term positioning.

The failed breakout has also disrupted Bitcoin's traditional 4-year cycle, historically tied to halving events. This deviation reflects shifting trader behaviors and a market increasingly influenced by macroeconomic factors rather than algorithmic patterns.

Conclusion: A High-Probability Bearish Reversal?

The confluence of bearish technical signals, thin liquidity, and institutional caution paints a compelling case for a short-term bearish reversal. The failed auction above $90,000 has exposed key support levels, with the $80,000 floor now under direct threat. Traders should monitor volume dynamics closely: a sustained expansion in volume above $90,000 would signal weakening bearish momentum, while a breakdown below $80,000 could trigger a test of the $75,000–$80,000 support cluster.

For now, Bitcoin appears trapped in a decision zone, with the market awaiting a catalyst to break the stalemate. Until such a catalyst emerges, the risk of a controlled pullback or a sharper bearish reversal remains elevated.