Wolf Research analysts highlight a rare 'maximum divergence' moment in the cryptocurrency market, where market sentiment is divided between those calling for a bear market bottom and those anticipating further declines. While Bitcoin remains above $90,000, major digital assets have dropped by 20-50% in just three months.
According to the company, this stark emotional difference occurred before a historically significant price reversal. The Wolf Research team has identified technical and momentum signals that could determine Bitcoin's year-end direction.
Market division…historical setup
Wolf Research analysts Rob Ginsberg and Reid Harvey explain that the current cryptocurrency market is distinctly divided.
Half of the participants believe that the bearish phase has only just begun, while the other half report that a bottom has already been reached.
The extreme divide referred to by the company as the 'maximum discrepancy' occurred historically before significant turning points.
Despite Bitcoin recently rising above $90,000, the broader market remains under pressure. Nearly all major cryptocurrencies have fallen between 20% and 50% over the past three months, indicating that risk appetite remains low. Investment flows also maintain a bearish tone, limiting enthusiasm beyond daily price movements.
Wolf Research takes a neutral stance and urges investors to pay attention to imminent opportunities. The firm still expects Bitcoin to potentially bottom around $75,000, while the current price remains significantly high. If their scenario materializes, it would imply an additional 23% drop.
The long-term support areas in the cryptocurrency market strengthen this analysis. These technical points have often indicated previous cycle lows and major turning points, serving as guides for current price action.
ETF flows, institutional hesitation
One of the key sentiment indicators is found in the flows of cryptocurrency ETFs (exchange-traded funds). Inflows into Bitcoin ETFs are bearish, making it difficult for the asset to sustain a rally above $90,000.
When the spot Bitcoin ETF launched earlier this year, strong institutional investment significantly cooled down.
Recent ETF flow data shows significant withdrawals from major Bitcoin ETF products in November and December. This trend suggests that large investors are waiting for clear signals before reducing exposure or injecting additional capital.
Trading momentum has not returned alongside the recovery in Bitcoin prices. Stagnant ETF flows and widespread declines in digital assets create a challenging environment for a sustained rally. Retail investors are also reflecting institutional uncertainties and remain divided.
Technical indicators, upward momentum
While momentum indicators have started to improve, overall caution remains. Daily MACD readings suggest that positive momentum is forming. However, analysts warn that it’s uncertain whether this rise indicates a full recovery or simply a brief pause.
Bitcoin is approaching two important technical levels. The 50-day moving average around $98,165 is the first challenge. Above that, there is a psychological barrier at $100,000, which has been difficult to reclaim and hold.
Wolf Research views the recent short-term bounce positively. Analysis suggests that crypto assets have returned to support areas seen at historical turning points compared to stocks. This adds more context to the technical backdrop.
Overall, these factors create a complex environment. Strong technical resistance, weak institutional flows, and asset declines compete against improved momentum and historical support areas. This mix shapes the evolving narrative around Bitcoin and digital assets.
Contrasting views define market outlook
Market sentiment is sharply divided among social media and analysts. Some observers are strongly skeptical about the current Bitcoin levels, arguing that the very high values are unsustainable, citing market mechanisms like stablecoin issuance as evidence.
Others believe that the same technical support levels pointed out by Wolf Research have concluded their corrections. This group sees the current price as an opportunity to eventually recover. This debate reflects uncertainties regarding macroeconomic trends, regulations, and institutional adoption.
In the coming weeks, it will become clear which perspective is correct. If Bitcoin breaks above and holds over $100,000, buying pressure may strengthen. However, a drop below $90,000 could revive selling pressure. Wolf's 'maximum discrepancy' signal may soon be resolved, potentially triggering a reversal similar to what was seen in previous cycles.
