Bitcoin is showing signs of "waiting buying power" that could support a price recovery, although the risk of a short-term correction remains after hitting a local peak of $94,700.
Following the rally at the beginning of January, stablecoin data, realized Capital flows, and profit/loss ratios suggest that external liquidation may be starting to be deployed, while the market remains affected by December losses.
- Bitcoin touched $94,700 before falling back to around $92,500; the risk of a correction remains.
- The listing of stablecoins on exchanges and the BTC/stablecoin ratio suggest that potential buying power is accumulating.
- Glassnode reports positive movement: the 7-day Bitcoin profit/loss ratio jumps to 1.78.
Bitcoin falls after peaking at $94,700, but liquidation could support a recovery.
Bitcoin reached $94,700 before correcting by about 2.40% to $92,500, but signals of buying power from stablecoin data and Capital flows could help stabilize and recover the price.
Bitcoin (BTC) hit a local peak of $94,700 on Monday, January 5th, before reversing and falling. At the time of data entry, BTC was trading around $92,500, representing a 2.40% decrease from its most recent high.
Short-term correction expectations are explained by liquidation clusters around key price levels. According to the original text, the market recorded liquidation levels above the local resistance of $94,500, while also seeing a notable liquidation cluster below the local support level of $84,000.
If prices fall sharply, the scenario being discussed is the possibility of a retreat to $80,600. However, data on purchasing power and Capital flows suggests that potential demand may emerge, making it premature to conclude a sharp downward trend.
The Bitcoin/stablecoin ratio reflects the accumulating buying power.
Bitcoin/stablecoin data is XEM "positive" as stablecoin inflows into exchanges increased while BTC prices corrected, indicating high potential buying power and the possibility of Capital flows starting to be deployed from the beginning of January.
In CryptoQuant Insights, analyst Darkfost stated that current Bitcoin/stablecoin data "remains highly constructive." The main argument is based on the continued inflow of new stablecoins into exchanges, while BTC declined during the December correction, causing this ratio to decrease.
When the ratio decreases, it is often interpreted as an increase in the amount of stablecoin “ammunition” relative to BTC on exchanges, meaning the market has greater potential buying power. Darkfost believes the signal at the time of observation was “particularly convincing.”
Notably, this ratio has rebounded since the beginning of January. As interpreted in the original article, this could be an early sign that Capital is beginning to flow into the market (capital deployment), although it does not necessarily mean that a short-term Dip has formed.
The outflow of Capital shifted slightly from negative to positive, reinforcing the upward trend.
Overall Capital flow was negative from December 26th to January 3rd due to losses outweighing profits, but it turned slightly positive by the end of the week; Glassnode data confirms the recent improvement.
Analyst AXEL Adler observed that overall capital Capital remained negative during the period from December 26th to January 3rd. This directly translates to realized losses exceeding realized profits, with pressure peaking on December 26th.
By the end of the week, the Capital flow turned slightly positive: realized profits slightly exceeded losses. According to the original text, data from Glassnode confirmed the upward shift in recent days, implying that the pressure to cut losses was showing signs of easing.
It's important to note that a "slightly positive" figure doesn't necessarily mean the market has fully absorbed previous losses. It simply indicates that the realized profit/loss balance is improving, shifting from a prolonged negative state to a more balanced one.
The 7-day Bitcoin profit/loss ratio bounced above 1 and reached 1.78.
The Bitcoin profit/loss ratio (7-day moving Medium ) has crossed back above 1 and risen to 1.78, indicating that realized profits are outpacing losses, a signal generally XEM positive in the short term.
According to Glassnode data cited in the original article, the 7-day moving Medium of Bitcoin's profit/loss ratio remained below 1 for much of December, reflecting a dominant loss-making environment.
This ratio then reversed, rising above 1 and reaching 1.78. Mechanistically, when the ratio is above 1, the total realized profit is greater than the total realized loss during the observation period, which usually strengthens market sentiment and reduces selling pressure due to losses.
Reduced circulating supply and inflows into Bitcoin ETFs support bullish prospects.
The decrease in the circulating supply of Bitcoin, coupled with strong inflows into Bitcoin ETFs, is XEM as a supporting factor, creating conditions for BTC to potentially rise further in the coming weeks if demand remains strong.
The original article stated that the decrease in the circulating supply of Bitcoin, coupled with strong inflows into ETFs, provides a basis for expecting Bitcoin to continue rising in the coming weeks. Given the improving liquidation of stablecoins and profit/loss indicators, these supply-demand factors could reduce the amount of BTC available for sale in the market.
However, short-term impacts could still be dominated by liquidation zones around key price levels, leading to increased volatility. Therefore, the reasonable scenario is that the market faces both the risk of a short-term correction and the potential for a recovery if sufficient external Capital inflows are implemented.
Frequently Asked Questions
Why could Bitcoin correct to $80,600?
The original text indicated that the expected correction was based on the structure of liquidation levels: there was liquidation/liquidation points above the $94,500 resistance and a cluster of liquidations below the $84,000 support, which could pull the price down further, including the $80,600 scenario.
What does the Bitcoin/stablecoin ratio tell us about purchasing power?
When stablecoins flow into exchanges increase while BTC prices correct, causing the Bitcoin/stablecoin ratio to fall, this is often interpreted as indicating higher potential buying power. The surge in the ratio since the beginning of January could be an early sign of Capital deployment.
What does it mean when Capital flows fluctuate between negative and slightly positive?
When Capital flow is negative, realized losses exceed realized profits. A slight shift to positive suggests that realized profits have slightly outweighed losses, reflecting improved sentiment and reduced selling pressure, although it may not fully offset the losses of December.
What does a 7-day profit/loss ratio of 1.78 mean?
A 7-day Medium profit/loss ratio exceeding 1 indicates that total realized profits exceeded total realized losses during that period. A level of 1.78 reflects an increased outflow of profit over loss, generally XEM a positive signal for the short-term trend.
