Analysis suggests that Bitcoin's key support level is around $89,200, and traders are still using leverage to buy on dips.

According to ME News, on January 9th (UTC+8), Bitcoin rebounded from a low of approximately $90,500, after previously dipping to around $89,300, testing support near the 50-day moving average ($89,200). This marks the third consecutive day of pullback for Bitcoin, after it surged to nearly $95,000 on Monday. Crypto trading firm Wintermute stated that the main reason for the Bitcoin decline was low trading volume coupled with profit-taking by traders. Jake Ostrovskis, Head of OTC Trading at Wintermute, said, "After an initial recovery in risk appetite at the start of the year, the market failed to break through the key $95,000 level, resulting in two-way volatility in trading over the past two days, while ETF outflows dominated." Furthermore, the market was also affected by the continued downward revision of expectations for a recent interest rate cut by the Federal Reserve. According to CME FedWatch data, as of now, the probability of a rate cut at the Fed meeting on January 28th is only 11.6%, compared to 15.5% a week ago and 23.5% a month ago. Derivatives positions indicate that market leverage is rising. Meanwhile, the funding rate for Bitcoin perpetual contracts remains positive at approximately 0.09%, indicating that longs are paying shorts to maintain their positions. A consistently positive funding rate during pullbacks suggests that traders are still using leverage to buy on dips. This concentrated long position structure increases the risk of longs being liquidated when prices fail to rise further, as even a mild decline could force leveraged traders to close their positions, creating additional selling pressure. (Source: ME)