The price has been sideways for a month, and indicators have turned bearish, but the real risks are often hidden in the blind spots of most people's vision.
As a long-term analyst tracking the cryptocurrency market, I find myself recently resembling an audience member of a suspense drama, clearly aware that the plot has twists but unable to grasp the specific timing. Over the past month, Bitcoin has oscillated repeatedly within the narrow range of $82,000 to $95,000, much like a cup of coffee slowly cooling down, appearing calm on the surface but no longer boiling hot.
Even more noteworthy is the gradually forming cup and handle pattern on the daily chart, which quietly tells the story of the market's hesitation. Compared to the historical high point in October of this year, the price has still retreated over 30%, which makes the bulls sweat.
01 The tug-of-war behind the pattern
The cup-and-handle pattern in technical analysis is usually seen as a continuation signal, but when this pattern is inverted, market sentiment also reverses. Over the past month, Bitcoin has oscillated between $82,000 and $95,000, forming a typical inverted cup-and-handle structure.
This pattern reflects the confusion of market direction. When prices attempt to rebound, they always face selling pressure; and when they decline, there is capital support. The result is that the market continuously exhausts the patience of both bulls and bears in a relatively narrow space.
The completion of the cup-and-handle pattern has become the most watched indicator in the market recently. Once the price effectively breaks below the key support of $82,000, it may trigger a new round of technical selling. At that time, we may have to discuss positions at $76,000 or even lower.
However, it is worth noting that the inverted cup-and-handle pattern can sometimes 'fail.' When most people believe the price will break downwards, the market often surprises them.
02 Chain reaction of leverage liquidation
Recent market volatility has not only stemmed from the spot level but also from greater pressure in the derivatives market. According to Coinglass data, the liquidation scale in the cryptocurrency market exceeded $540 million in the past 24 hours, with approximately $160 million related to Bitcoin liquidations.
High leverage has become the most vulnerable link in the current market. Analyses show that a $200 million capital outflow can trigger $2 billion in forced liquidations, equivalent to a 10-to-1 leverage ratio. This means that 90% of Bitcoin's apparent 'market depth' is actually built by leveraged investment institutions, while actual capital only accounts for 10%.
This structure makes the market easily swayed by capital flows, while such flows would have little impact in traditional markets. When leverage becomes the dominant force in the market, each fluctuation triggers a chain reaction, amplifying like a domino effect.
In the past 30 days, long-term holders of Bitcoin have cumulatively sold over 320,000 BTC, reflecting weak market confidence and liquidity pressure. This selling pressure creates a negative feedback loop with leverage liquidation, continuously exacerbating price volatility.
03 Subtle changes in institutional fund flows
The inflow of funds into the U.S. Bitcoin spot ETF can be seen as an important barometer of institutional sentiment. The latest data shows that since December, the U.S. Bitcoin spot ETF has recorded only about $21 million in net inflows, a stark contrast to previous single-day inflows of several hundred million dollars.
BlackRock's iShares Bitcoin Trust (IBIT) set a record for a single-day net redemption of $523 million in November. At the same time, the number of Bitcoins held by Strategy Company also dropped from a peak of about 484,000 to around 437,000 in November.
The cooling of institutional participation is reflected not only in ETF flows but also in market depth and liquidity. When large institutions begin to slow down, the market often requires a longer time to digest buying and selling pressure.
However, some analysts believe this may be a normal adjustment. JPMorgan still expects Bitcoin to rise by 84% in the next 6-12 months, as its model predicts Bitcoin's trading trend will resemble gold, with a theoretical price close to $170,000.
04 Macroeconomic headwinds
The Federal Reserve's monetary policy is like the sword of Damocles hanging over risk assets. Although the Fed cut rates by 25 basis points again in December, its cautious attitude towards further rate cuts disappointed the market.
The latest U.S. non-farm payroll data shows that the unemployment rate unexpectedly rose to 4.6% in November, marking a four-year high. However, the market's expectations for a Federal Reserve rate cut in January have not been affected, with the probability of a rate cut remaining at a relatively low level of 24%.
The trend of the dollar often shows a negative correlation with Bitcoin prices. When the dollar is strong, risk assets like Bitcoin are usually under pressure. Currently, the dollar index remains relatively strong, creating macro headwinds for Bitcoin.
On the other hand, the unwinding of yen carry trades is also related to the decline of global risk assets, with a correlation coefficient of 0.55 with the S&P 500 index. This interrelationship of global liquidity mechanisms means Bitcoin is no longer an independent market but is closely connected to the traditional financial system.
05 My personal script and key positions
After weeks of observing the inverted cup-and-handle pattern, I must admit that the market is at a critical crossroads. As an analyst who has been tracking cryptocurrencies for a long time, I believe the current market sentiment may be overly pessimistic, and this often breeds opportunity.
If the price can effectively break through the resistance zone of $94,000 to $95,000, the bearish logic of the inverted cup-and-handle pattern will be invalidated, and the market may reopen upward space. In this case, I believe Bitcoin is likely to retest the psychological barrier of $100,000.
However, if it falls below the $82,000 support, the next key position will be below $80,000. But I personally believe that the $76,000-$78,000 range will have strong buying support, as this is the low point area for November and also the cost line for many institutional investors.
I tend to believe that the current adjustment is a normal pullback in a bull market, rather than the beginning of a bear market. As more countries quietly accumulate Bitcoin reserves, sovereign capital is providing implicit support to the market. By 2028, Bitcoin's trading volatility may drop below 15%, gradually aligning with traditional value storage tools like gold.
As more countries quietly accumulate Bitcoin reserves, sovereign capital is providing an unseen support in the market. El Salvador bought $100 million worth of Bitcoin during the crash, which only accounts for 0.35% of the U.S. Treasury's daily operational budget.
This sovereign asymmetry is changing the rules of the market game. When leveraged traders are forcibly liquidated due to a 10% drop, sovereign nations see a strategic opportunity.
The market will never have a single narrative. While the current technical pattern is important, the logic of long-term value storage remains intact. Bitcoin may be transitioning from a highly volatile speculative asset to a strategic reserve asset driven by sovereign nations; although this shift is less exciting, it may be the true beginning of maturity.
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