Bitcoin faces new selling pressure, with prices dropping below US$80,000 after a sharp correction. This decline comes after a general market weakening and an increase in risk-averse investor sentiment.
Although large wallet holders are reacting defensively, there are several underlying bullish signals indicating that Bitcoin may be preparing for a short-term recovery as selling pressure starts to show signs of exhaustion.
Large Bitcoin Holder Exits
On-chain data shows a significant reduction in risk among large Bitcoin holders throughout January. The number of wallets with balances over US$100,000 and US$1 million in BTC collectively decreased by about 166,000 addresses within two weeks. This group typically represents institutional players and high-net-worth investors, whose positions often have a large impact on liquidity and price movement direction.
Distribution phases like this usually exacerbate downward volatility, as the exit of large holders reduces passive buying support. However, history shows that this period often coincides with the final stage of corrections when leveraged traders or weak hands are eliminated while long-term participants gradually absorb the supply.
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Current market sentiment remains very bearish on both social and quantitative indicators. Data from Santiment shows that bearish comments on crypto assets have surged to the highest level since the market crash on November 21, reflecting high levels of fear and resignation among retail traders.
From a contrarian perspective, extreme sentiment drops at levels like this have historically correlated with local market lows. Previous cycles indicate that when pessimism is highly dominant, marginal sellers decrease, allowing prices to stabilize and move upwards—as long as macro conditions and liquidity do not worsen. Such an environment increases the likelihood of a short-term bounce rather than a continued impulsive drop.
Bitcoin is currently trading near US$78,848 after bouncing from the demand zone of US$75,000, which has become the most recent swing low and attracted aggressive spot buying action. Although the market structure is generally still corrective, momentum metrics indicate that downward pressure is beginning to slow, forming a more constructive short-term setup.
On lower timeframes, BTC is forming a bullish divergence, with CMF printing a lower high while price records a slightly lower low. Such divergences usually indicate improving demand strength beneath the surface as capital flows in, and often serve as an early sign of a recovery rally in a downtrend.
If this divergence is confirmed, Bitcoin has the potential to reclaim the level of US$80,000, which is now the nearest resistance. If the price can hold above this zone, the potential for a continuation of the rally towards US$84,698 will open up. If this level can be established as support, the market structure will improve significantly, and the chances of a broader recovery towards US$89,241 will increase, consistent with previous consolidation areas and volume.
Nevertheless, the risk of a downturn remains if bearish sentiment intensifies. If support at US$75,000—which previously held during the crash in April 2025—fails, the short-term bullish thesis will be invalidated. This could open up the risk of BTC dropping towards the US$70,000 area or lower. For now, price action indicates that Bitcoin is at a critical point between further distribution or a corrective recovery opportunity.
Source: @BeInCrypto ID
Reposted by: VDT Financial Institution
