Wolfe Research analysts highlight a rare moment of 'maximum disagreement' in the cryptocurrency markets, as sentiments split between those waiting for a bottom in a bear market and those expecting further discounts. Bitcoin remains above $90,000, while major digital assets have dropped 20-50% in just three months.
This strong sentiment divide has historically preceded significant price reversals, according to the company. Wolfe Research's team has identified new technical and sentiment signals that could influence Bitcoin's direction by the end of the year.
Market fragmentation creates a historical setup
Rob Ginsberg and Read Harvey, analysts at Wolfe Research, describe the current crypto market as strongly divided.
Half of the participants believe the bear phase is just beginning, while the rest see the bottom already reached.
This extreme division, which the company refers to as 'maximum disagreement,' has historically preceded significant turning points.
Despite Bitcoin's recent surge above $90,000, broader markets remain under pressure. Almost every major cryptocurrency has dropped 20% - 50% over the last three months, indicating a low risk appetite. Investment flows have also remained weak, limiting enthusiasm outside daily price movements.
Wolfe Research positions itself neutrally and notes that investors will soon have an opportunity. The company still expects that the bottom for Bitcoin could be close to $75,000, even though current prices are significantly higher. This would mean a further drop of 23% if their scenario materializes.
Long-term support areas in the crypto market reinforce this analysis. These technical zones have often marked the bottoms of previous cycles and major turning points, serving as a guide for current price behavior.
ETF investments indicate institutional hesitation
One key sentiment indicator can be found in crypto ETF flows (exchange-traded fund). Bitcoin ETF investments remain weak, complicating the asset's price rally above $90,000.
Institutional investment, which was strong at the beginning of the year with the launch of spot Bitcoin ETFs, has particularly cooled.
The latest ETF flow data shows that significant outflows were seen from large Bitcoin ETF products in November and December. These trends suggest that large investors are either reducing their exposure or waiting for clearer signals before committing additional capital.
The trading trend has not returned alongside the recovery in Bitcoin's price. Slow ETF flows and the drop in broad digital asset values create a challenging environment for a sustainable price rally. Retail investors remain divided, reflecting institutional uncertainty.
Technical indicators show a rising sentiment
Sentiment indicators are beginning to improve, although a broader caution prevails. Daily MACD readings hint that a positive trend may be forming. However, analysts warn that it is uncertain whether this turnaround signifies a full recovery or just a brief respite.
Bitcoin is approaching two significant technical levels. The 50-day moving average, around $98,165, is the first challenge. Above that is a key psychological barrier at $100,000, a level that has been difficult to reclaim and hold.
Wolfe Research sees the recent short-term rise as constructive. Their analysis notes that cryptocurrencies have returned to previously seen support areas relative to stocks, observed at earlier turning points. This provides more context to the technical background.
Overall, these factors create a complex environment. Strong technical resistance levels, weak institutional flows, and asset declines compete with improving sentiment and historical support areas. This combination defines the evolving narrative for Bitcoin and digital assets.
Contrasting views define market outlooks
On social media and among analysts, market sentiment is strongly divided. Some observers are very skeptical of current Bitcoin levels, claiming these values are unsustainable and pointing to market mechanisms like stablecoin issuance as evidence.
Others believe the correction is over, pointing to the same technical supports referenced by Wolfe Research. This group sees current prices as opportunities before a final recovery. The discussion reflects uncertainty surrounding factors such as macroeconomic trends, regulation, and institutional adoption.
The coming weeks may reveal which view proves correct. If Bitcoin can break and hold above the $100,000 mark, bulls may gain an advantage. However, falling below $90,000 could revive selling. Wolfe's 'maximum disagreement' signal could resolve soon, potentially triggering turns seen in previous cycles.
