Bitcoin Consolidates Below $90K as ETF Flows Signal Market Indecision
Market Pulse
- Bitcoin prices trade at $88,226 on the day, down almost 4.1% this week.
- While flows from institutions such as ProShares Bitcoin Strategy ETF benefit bullish bias, other outflows temper upside pressure.
- For instance, the largest cryptocurrency outflow spikes jump to 15.9k BTC, its most significant since mid-July, Wlipur observes.
The recent price activity of Bitcoin suggests that it has been consolidating and resetting. The cryptocurrency declined by 4.1% last week and closed at $88,226. The downward movement was accompanied by choppy ETF trading flows, as BlackRock pulled $145.4 million from ETFs one day and then invested heavily the next. This suggests that investors are also face similar tensions. Given that December’s rally made prices overextended, the recent step back seems more like recovery to breathe new life into the trend. For investors, the key question remains: will the $85-90K zone provide enough space for the next uptrend?
| Metric | Value |
|---|---|
| Asset | BITCOIN (BTC) |
| Current Price | $88226.59 |
| Weekly Performance | -4.12% |
| Monthly Performance | -20.95% |
| RSI (Relative Strength Index) | 32.5 |
| ADX (Average Directional Index) | 46.9 |
| MACD (MACD Level) | -5544.89 |
| CCI (Commodity Channel Index, 20-period) | -77.55 |
RSI Cools to 48.6 – First Neutral Reading Since November Rally
With the RSI back around 50, the momentum takes a relaxed stance. Reading the oscillator at 48.61, traders see momentum has reset from December’s overheated levels without capitulating into oversold territory. This balanced RSI position mirrors what happened in early November, when a similar cooldown from 70+ readings preceded Bitcoin’s explosive move from $67K to $100K. The reset gives the market room to breathe while keeping the door open for moves in either direction.
Therefore, with minimal time decay for swing traders to be concerned about with light positioning cleared out, they can let the recent consolidation burn off any overbought readings and potentially set up a safer, more sustainable rally to join.
ADX at 46.9 Confirms Strong Trending Conditions Despite Pullback
The strength of the trend is still quite strong given the ADX reading of 46.86. As a reminder, this index is a widely-used measure of the trend’s strength. A reading above 25 is meant to suggest a large movement is currently in play; read above 50 suggests a very large movement.
So, in other words, the ADX is telling us that the market is taking a breather, not that the new uptrend is over already. The ADX peaked close to 50 in mid-December, and it hasn’t fallen much at all during the first full week of the year, so the bulls’ trend strength is still there. If one were to use the ADX to make trading decisions, as long as the ADX is still above 40, they would view a pullback low as a buying, not a selling, opportunity.
20-Day EMA at $94K Becomes First Resistance After Supporting December Rally
The 2-day Relative Strength Index (RSI) is firmly in oversold territory at 19.78, which classically suggests a bounce may be close at hand. The same goes for the daily RSI, which has hardly been at these levels since March 2020. There is still room to fall, should the down move intensify, but when these macro and technical variables are combined, it appears that the market is overheated and primed for a relief rally.
The price structure is concentrating at resistance with the new monthly R1 pivot at $93,000 and again at the Q1 resistance of $94,400. Given the supportive nature of the 50-day EMA combined with these overhead technical points, Bitcoin closing even slightly below the current level of $88,000 will favor the short side for a trajectory back down to the red line and $85,000. The normal range of motion and reversion mean suggest resistance targets starting with $91,500 on the low end. An upside reakout does have the potential to run quickly by reaching the $100,000 round number, followed by $106,250.
Support Stacks Between $81.7K and $85.4K While Resistance Looms at $101.8K
There is strong resistance around the $100K level, which is also supported by the 50-day EMA at $101,778 and the weekly pivot at $100,120. In addition, various technical levels in the range of $100K to $102K have converged, making it a solid resistance. It will be difficult for the price to cross this resistance zone without consistent buying demand.
Bulls are defending several support levels below the current price. The nearest floor is the monthly pivot at $90,767, which is only 2.8% away. The 100-day EMA and recent swing lows near $85,446 offer more solid support before the monthly S1 pivot at $81,694. This support has contained the selling so far, with each subsequent retest seeing declining volume.
Importantly, the market structure indicates buyers remain in the driving seat provided they maintain $85.4K support on any pullback. The substantial decline in open interest during the recent pullback indicated that overextended longs were liquidated. This could serve as a healthy base. This washout, coupled with the diverging ETF flow, tells the story of a market taking some rest before potentially continuing the rally.
Bulls Need Decisive Close Above $94K to Reignite Uptrend Momentum
If the price reclaims the 20-day EMA at $94,063 with conviction, then bulls would be back in the driver’s seat and would probably attack the psychological $100K level next. A daily close above $94,000 would turn the near-term bias in favor of the bulls and could push the price higher as sidelined buyers jump back into the market. The mixed ETF flows indicate that institutional interest is still present following the correction, and they could be the drivers of the next rally.
If the price loses the $90,000 psychological level, the market will indicate that the level of demand has weakened significantly and that buyers are not willing to fight for higher levels. This would also confirm the completion of a bearish deviation, with the market not having enough power to sustain above the range.
Based on the technical setup and institutional flow activity, the most probable short-term scenario has BTC consolidating in the $85K-$94K range while absorbing recent up-moves. The substantial drop in open interest along with neutral RSI levels implies that the market would benefit from some time to readjust positions to the weakened open interest levels prior to making another strong push. Given a still elevated ADX and relatively firm trend structure, this consolidation should be seen as a chance to rest, rally and reload.
