Bitcoin Holds Key Support As Weekend Liquidity Sets In - $98,200 And $107,500 In Focus

Bitcoin and Ethereum ETFs have recorded mixed inflows and outflows on January 16, with Bitcoin ETFs posting $394.68 million in outflows after a four-day inflow streak. Meanwhile, Ethereum ETFs added $4.64 million, continuing a five-day rally. This shift in flows indicates ongoing investor activity and market sentiment shifts ahead of the weekend.

The U.S. crypto market is under pressure as the White House considers withdrawing its support for the CLARITY Act. This regulatory uncertainty has caused Bitcoin and most altcoins to drop in value. The administration is seeking a compromise that satisfies both the crypto industry and the banking sector, as Coinbase has withdrawn its support for the bill.

Bitcoin is currently testing key support levels around $98,200, with the next significant resistance at $107,500. If Bitcoin breaks above this level, it could signal a bullish continuation. However, a drop below $82,477 could lead to further corrections. Traders are closely monitoring these levels as weekend liquidity sets in.

Why Did This Happen?

A large tracked account has shown a 100% long bias in Bitcoin, Ethereum, and Solana, suggesting increased risk appetite among institutional players. This positioning adds to the market's potential for upward movement. Rising open interest also indicates that more leveraged positions are being added to the market, which can amplify price trends.

Bitcoin's price reached $97,000 briefly on January 15 after a sharp inflow of $843.6 million into U.S. spot Bitcoin ETFs, with BlackRock's IBIT leading the inflows. This coincided with broader market optimism and ongoing discussions around the CLARITY Act.

How Did Markets React?

Ethereum is at risk of a pullback despite strong fundamentals, with a potential bearish breakout targeting support at $2,623. Ethereum ETFs continue to attract inflows, with $478 million added since January 12. However, this does not guarantee a sustained bullish trend, as rising open interest can also lead to sharp corrections if prices dip.

The broader crypto market has seen a decline, with market capitalization dropping to $3.2 trillion and 24-hour volume slumping by 25%. This decline coincides with the White House's threat to withdraw support for the Market Structure Bill, which stalled in the Senate.

What Are Analysts Watching Next?

Bitcoin's key support at $98,200 is being watched closely. A break above this level could trigger a move toward $107,500, which is seen as a potential breakout threshold. If Bitcoin fails to hold above $98,200, it could face a retest of lower support levels.

Analysts note that Ethereum could face a significant pullback if it breaks below $2,623. The recent rally in Ethereum ETFs may not be enough to sustain a long-term bullish trend, particularly if regulatory risks persist.

Market observers are also paying attention to the positioning of large accounts and open interest levels. These indicators provide insight into the risk appetite of institutional investors and the potential for leveraged moves. If prices remain stable and leverage continues to build, the path of least resistance remains up. However, if prices weaken with elevated open interest, sharp corrections are likely.