Bitcoin BTC$90,483.74 was off its worst levels in morning U.S. trade Thursday, rising back to $90,500 after having fallen to roughly $89,300 earlier in the session.
This third consecutive day of pullback comes after bitcoin rose to just shy of $95,000 on Monday, with lighter trading volumes and a wave of profit-taking being observed by crypto trading firm Wintermute.
“After initial re-risking from the yearly open, the market failed to break the key $95,000 level, which resulted in two-way trade as exchange-traded fund (ETF) outflows dominated the last two sessions,” said Jake Ostrovskis, head of OTC at Wintermute.
Additionally, at work may be continued declines in expectations for a near-term rate cut by the Federal Reserve, with the probability of an easing at the Fed’s January 28 meeting now at only 11.6%, according to CME FedWatch. One week ago, the odds stood at 15.5% and one month ago at 23.5%.
A key technical level bitcoin is currently fighting is the 50-day moving average, a widely followed trend indicator that smooths price action over the past 50 trading days. This moving average is currently at $89,200 — nearly the exact level at which bitcoin bounced today.
Derivatives positioning shows growing leverage in the market. Open interest, which represents the total number of outstanding bitcoin futures and options contracts, has climbed to a three-week high of nearly 700,000 BTC. This marks an increase of roughly 75,000 BTC since the start of the year, suggesting traders are adding exposure rather than reducing risk.
At the same time, perpetual futures funding rates remain positive at around 0.09%, indicating that long positions are paying shorts to maintain exposure. Persistently positive funding during pullbacks suggests traders continue to buy dips using leverage. When prices fail to move higher, this crowded long positioning increases the risk of long liquidations, as even modest downside moves can force leveraged traders to close their positions, adding further selling pressure.