Bitcoin Bull Market: A 4.5% Move Could Start the Rally
Bitcoin’s price action is sitting at a critical decision point this week. After peaking on January 5, Bitcoin (BTC) has seen a slight pullback, staying narrowly in the red year-over-year with a decline of approximately 4.5%. While this decline may seem minor, history suggests that this small number could hold significant implications for the next market trend.
Historical Patterns: A Signal for Bullish Momentum?
Historically, when Bitcoin’s one-year price change turns negative and subsequently flips back positive, the market has often experienced major trend shifts. A similar setup last occurred in July 2020, leading to a sustained bullish phase. Today, Bitcoin is hovering just below this crucial flip point. A price move of roughly 4.5% would turn its yearly change positive, potentially reigniting investor enthusiasm.
Currently, Bitcoin is trading within a bullish technical formation known as the “cup and handle” pattern. This structure often signals an upcoming breakout after a period of consolidation. If BTC manages to break above its neckline resistance, history might just repeat itself, presenting lucrative opportunities for investors.
Short-Term Indicators Support Optimism
Zooming into short-term trends, Bitcoin has reclaimed its 20-day exponential moving average (EMA), an important level that traders often watch. The last time BTC held above its 20-day EMA, the asset rallied by nearly 7% within days. As of now, maintaining this position is a promising sign for potential further upward movement.
The next hurdle lies at the 50-day EMA level. If Bitcoin closes above this indicator, it would signal a stronger bullish recovery, amplifying the significance of the breakout potential established by the “cup and handle” formation.
On-Chain Data Reinforces Positive Sentiment
Adding support to the bullish case is the significant drop in exchange inflows, which track the number of BTC being moved to exchanges (a common precursor to sell-offs). Exchange inflows have decreased by over 95% in the past two months, dropping from 78,600 BTC per day to a mere 3,700 BTC—an indication of reduced selling pressure.
Additionally, leverage positioning remains skewed, with short exposure far outweighing longs. As of this week, cumulative short liquidation leverage stands at $4.1 billion, compared to $2.17 billion for long positions. If Bitcoin sees an upward price movement, it could trigger a short squeeze, adding further buying pressure in the market.
Clear Price Levels to Watch
Key technical levels will be essential as Bitcoin navigates its next move. A daily close above $94,880 would confirm the “cup and handle” breakout and likely drive the price toward targets around $99,810 or even $106,340 based on Fibonacci extensions. On the downside, maintaining support above $89,230 is crucial to preserving Bitcoin’s bullish structure.
If you’re excited to ride the wave of Bitcoin’s potential breakout, it may also be interesting to explore tools that help you track cryptocurrency trends and analytics. One such option is the Trezor Model T Hardware Wallet, designed to keep your investments secure while you monitor market opportunities.
Stay One Step Ahead
With selling pressure at a six-month low, short-term trend support intact, and a rare historical signal just within reach, the coming days could define Bitcoin’s trajectory for the months ahead. Whether it reaches this critical 4.5% mark may determine if a new bull phase begins or if the asset remains in consolidation.
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