Bitcoin Price Rejection Drama: Will the $84K Safety Net Hold?

Bitcoin (BTC) has slipped below $90,000 after failing to hold a key resistance level earlier this week. The pullback is being driven by profit-taking and ETF outflows, which signal a potential short-term correction in the leading cryptocurrency according to analysis.

Bearish sentiment is growing as institutional demand fades. Spot Bitcoin ETFs recorded $486 million in outflows on Wednesday, the second consecutive outflow and the largest since November 20. This trend has increased downward pressure on the price, raising concerns among investors about the sustainability of the current rally.

Technical indicators also suggest weakening bullish momentum. The Relative Strength Index (RSI) on the daily chart is approaching the neutral 50 level, signaling a potential shift in market sentiment. If RSI continues to decline, it could reinforce the bearish outlook for BTC.

Why Did This Happen?

The recent drop follows a failed retest of a key resistance level at $94,253, which was previously broken in early January. Traders and analysts are closely monitoring whether Bitcoin can find support at $90,000 or if the decline will continue. The price has already dipped below the upper boundary of the consolidation range, which analysts viewed as a key level for maintaining the upward trend.

Profit-taking has intensified, with on-chain data showing spikes in realized gains on Monday and Wednesday. These spikes indicate that holders are selling at a significant profit, adding to the downward pressure on the price.

How Did Markets React?

Market participants have reacted cautiously. Santiments Network Realized Profit/Loss data highlight the increasing number of traders selling their positions, which has led to a broader correction across the crypto market.

Bitcoin’s decline has also affected the broader market. XRP and Ethereum have both seen significant drops, with XRP down 7% and Ethereum down 4% in 24 hours. Analysts at IG note that the weakness reflects profit-taking as traders look ahead to key macroeconomic data.

What Are Analysts Watching Next?

Analysts are watching the $84,569 support level as a critical area for Bitcoin. If the price closes below $90,000 on a daily basis, it could extend the correction toward $84,569. This level is seen as a key psychological and technical support point for the market.

On the other hand, if Bitcoin can stabilize around $90,000, it could trigger a rebound toward the key resistance level at $94,253. This would indicate that the market is still holding together despite the recent weakness.

Institutional investors and ETF flows will be important to watch. SoSoValue reports that Bitcoin spot ETFs continue to see outflows, and this trend could impact the broader market. If the outflows continue, it could signal a broader shift in investor sentiment toward risk-off strategies.

The broader financial market is also watching for a potential shift in macroeconomic data, particularly the December jobs report due Friday. If the data supports expectations for a Federal Reserve rate cut, it could provide a boost to risk assets, including cryptocurrencies.

The outcome of this week’s market activity will be closely watched by investors and analysts alike. The key question is whether Bitcoin can hold at the $84,569 level and avoid a deeper correction, or if the current bearish momentum will continue.