Bitcoin Coils for a High-Stakes Move as Traders Eye $98K Level

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Bitcoin has retreated slightly from levels near $98K to trade at $95.5K, as traders watch for signs of a breakout. The first cryptocurrency has reached a key Fibonacci retracement level, and the next direction depends on further momentum. The broader crypto market has seen a 1.5% decline over the past 24 hours.

Retail investors have been withdrawing from the market amid fear and uncertainty, with over 47,000 leaving in just three days. This outflow was countered by a significant drop in exchange-based Bitcoin volume, which is now at a seven-month low.

The recent price movement has been partly driven by short squeezes in the futures market, rather than fresh buying interest. Derivatives open interest is still below its October peak, and leverage levels have been reduced significantly.

Why the Move Happened

The recent surge in Bitcoin came as U.S. spot ETFs absorbed $1.7 billion in inflows over three days. BlackRock’s IBIT led the way, capturing $648 million in a single day. This influx of capital helped drive BTC temporarily above $97,000.

Institutional interest is also showing signs of picking up, as seen in the rising inflows into spot ETFs. Morgan Stanley recently filed for a Bitcoin trust, and major indexes like MSCI have included crypto-related names to maintain passive exposure.

How Markets Responded

Bitcoin’s recent price action has shown signs of fundamental strength. Long-term holders are holding onto their positions despite price increases, as indicated by the Value Days Destroyed metric. This suggests the current rally is driven by structural factors rather than speculative trading.

Technical indicators, including the RSI and MACD, show a mixed but mostly bullish picture. The RSI has reached overbought levels, indicating potential for a pullback. The MACD remains positive, suggesting continued momentum in the short term.

Bitcoin is currently trading just below the 61.8% Fibonacci retracement level. A break above $98K could trigger a move toward $100K, while a breakdown below $95K may send it back into consolidation.

What Analysts Are Watching

Analysts are keeping a close eye on the next move in Bitcoin after recent volatility. Bitfinex analysts note that flows and access remain in Bitcoin’s favor, with strong ETF inflows and growing institutional adoption.

However, not all signals are bullish. The derivatives segment has not yet entered a full growth phase, and some analysts caution about the risks of overleveraged positions. A short squeeze in the futures market has been the primary driver of the recent move, rather than fresh capital.

Bitcoin’s open interest has dropped by 31% in recent days, with some analysts suggesting this could mark a market bottom. A possible breakout above $105K is being watched closely, as it could signal the start of a larger rally.

Regulatory developments remain a key factor. The Senate Banking Committee continues to work on a pivotal crypto bill, though delays in the process have kept uncertainty high. If passed, it could provide clarity for the industry and reduce regulatory risk for investors.

Overall, the market remains in a holding pattern as it awaits further signs of direction. A break above $98K could confirm the bullish case, while a drop below $95K might signal a return to consolidation.

With the macroeconomic environment and geopolitical factors adding to the uncertainty, investors are advised to monitor both technical and fundamental developments closely.