Bitcoin Struggles to Hold $90K Despite Cooling Inflation as Market Enters Critical Repair Phase
Following softer-than-expected inflation figures, Bitcoin briefly surged above $90,000. Now, it is trading around $85,000 as traders
Quick overview
- Bitcoin briefly surged above $90,000 following softer-than-expected inflation figures but is currently trading around $85,000.
- On-chain metrics indicate stabilization rather than capitulation, with selling pressure being reactive rather than structural.
- Technical analysis suggests that Bitcoin must close above $90,000 to confirm buyer conviction and potential upward momentum.
- Traders should remain cautious as the market is in a transitory phase, with volatility still high and the need for confirmation of a sustained upward trend.
Following softer-than-expected inflation figures, Bitcoin BTC/USD briefly surged above $90,000. Now, it is trading around $85,000 as traders evaluate whether the current levels indicate stabilization or additional downside risk.
CPI Data Sparks Short-Lived Rally as Fresh Positioning Emerges
After the Consumer Price Index report from November showed that US inflation had cooled to 2.7% year-over-year, well below the expected 3.1%, Bitcoin briefly recovered the $90,000 mark. A driver for Bitcoin’s upward movement, the milder inflation print momentarily restored risk appetite throughout financial markets by bringing the gap closer to the Federal Reserve’s 2% target.
But the surge was short-lived, as Bitcoin is currently trading at about $85,000, down 1% from the previous day. Crypto trader Back claims that increasing open interest during the post-CPI rally indicates new positioning as opposed to just short covering. Bitcoin has room to move if liquidity circumstances improve because options gamma exposure is still mostly balanced around spot prices. However, the move is being described as impulsive rather than the start of a long-term trend, and the initial gains were mostly motivated by liquidity rather than underlying conviction.
The Bank of Japan’s interest rate announcement on Friday is the last significant macroeconomic event of 2024. A large portion of this risk may already be priced into Bitcoin’s present levels, according to recent range-bound price action, even though BOJ policy changes can affect global liquidity through yen funding markets.
On-Chain Metrics Signal Balance Sheet Repair, Not Capitulation
Since October, Bitcoin has entered a repair phase, according to data from CryptoQuant, with on-chain measures suggesting stabilization rather than dispersal. While the inflow spent-output profit ratio (SOPR) is hovering around breakeven levels, indicating that coins are being sold close to cost basis rather than in panic, the exchange’s net-unrealized profit/loss (NUPL) indicates that unrealized losses have stopped deepening.
The conclusion that selling pressure is reactive rather than structural is supported by the fact that deposit activity on major exchanges peaks mostly during transitory declines and then declines as prices level off. The MVRV ratio has flattened, indicating range-bound trading rather than further speculative excess or widespread capitulation, even though highly active address inflows are still high.
This on-chain behavior stands in stark contrast to earlier bad market periods, when the market structure was defined by deepening unrealized losses and delayed distribution. Instead of undergoing forced liquidation, the current trend indicates that holders are mending balance sheets and absorbing losses.
BTC/USD Technical Analysis Points to Critical $90,000 Threshold
Technically speaking, Bitcoin will be put to the test at $90,000. Buyer conviction and a possible move into the fair value gap between $90,500 and $92,000, where urgent sell-side liquidity awaits, would be demonstrated by a daily close above this barrier and the monthly volume-weighted average price (VWAP).
On the other hand, Bitcoin would remain susceptible to testing swing lows at $83,800 if it were rejected at current levels and short positioning strengthened. Whether the recent stabilization turns into a longer-lasting upward trend or if more consolidation is still required will probably depend on the cryptocurrency’s capacity to recover and hold above $90,000.
Bitcoin Price Outlook: Cautious Optimism Amid Improving Macro Backdrop
Bitcoin’s continued stabilization could develop into prolonged upward momentum if the stronger inflation outlook results in less dollar pressure and drifting real yields in the upcoming sessions. Conditions for a possible breakthrough are created by the combination of lowering inflation, balance sheet repair shown in on-chain data, and technical positioning close to important resistance levels.
However, considering the current price action’s impulsivity and the absence of consistent follow-through over $90,000, traders should continue to exercise caution. Although short-term volatility is still high and structural circumstances are progressively becoming better, the market seems to be in a transitory stage.
In the near future, a verified break above $90,000 with significant volume might aim for the $92,000–$95,000 level. If this level is not recovered, there may be a retest of support at $83,800 before laying the groundwork for the subsequent run higher. As macro headwinds lessen, the odds favor a gradual rebound; however, positioning still requires patience and confirmation.
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