Bitcoin's Risk Signal Flips Bullish, But $100K Must Hold

Bitcoin's bearish pressure has significantly eased, according to the co-founders of market intelligence firm Glassnode. In a recent analysis, Jan Happel and Yann Alleman, who go by the handle Negentropic, indicated that Bitcoin's Risk Signal has turned bullish.

The Bitcoin Risk Signal, a proprietary indicator that combines Bitcoin price data, on-chain data, and other trading metrics, suggests that the risk of a major price drawdown has decreased. However, the analysts caution that a bullish trend reversal is not yet confirmed, as Bitcoin needs to flip $100,000 into support.

Negentropic highlights both the good and the bad news. The good news is that the Risk Index has dropped below 25, indicating a significant easing of bearish pressure. The bad news, or perhaps not so bad, is that the BTC futures-to-spot ratio shows a higher increase in futures than spot, suggesting that the recovery is futures-driven. Additionally, shorts are piling up above $99,000-$100,000, which could potentially fuel a squeeze.

Bitcoin has reclaimed the $97,200-$98,500 level, and holding this level is crucial. However, until $100,000 is broken, a trend reversal cannot be confirmed. The analysts also emphasize the importance of increasing spot trading volume to hold higher price levels as support. Each rebound has been weaker, signaling a lack of spot volume for a stronger move. Until the $97,000-$98,500 level is recovered, $92,000 remains the key downside level to watch.

At the time of writing, Bitcoin is trading at $98,336, with a flat performance on the day.