Bitcoin edged higher by 1.09% over the past 24 hours, closing at $88,579—a notable outperformance against the broader cryptocurrency market, which declined by 0.8% during the same period. This modest rally stems from a confluence of on-chain supply dynamics, technical indicators flashing early signs of momentum, and shifting macro sentiment that, while cautious, leans toward optimism for future liquidity conditions in 2026.
A key factor underpinning Bitcoin’s resilience is the easing of sell pressure from long-term holders. On-chain data from CryptoQuant reveals that these investors—typically defined as those holding coins for over 155 days—added approximately 10,700 BTC to their wallets this week, reversing the aggressive distribution observed in prior weeks. This shift suggests a growing conviction among historically reliable market participants that current prices may represent a floor rather than a temporary bounce. Compounding this supply-side support, U.S. spot Bitcoin ETFs recorded net outflows of $348.1 million on December 31, continuing a recent trend of capital moving off exchanges. Such outflows typically tighten available spot liquidity, reducing the immediate overhang of sell orders. Historically, phases of long-term holder accumulation have preceded market stabilization or even sustained rallies. Market observers are now watching the 30-day Apparent Demand metric closely, as a sustained move back into positive territory could signal broader demand recovery.
From a technical standpoint, Bitcoin’s price action shows early signs of a potential rebound. The asset found support at the 0.786 Fibonacci retracement level around $86,612 before bouncing, and the MACD histogram turned positive for the first time since mid-December—a potential bullish crossover. Relative Strength Index (RSI) readings have also returned to neutral territory, suggesting the recent downtrend may have exhausted its immediate selling momentum. However, caution remains warranted. Bitcoin continues to trade below its 30-day simple moving average (SMA) of $88,926, and the formidable 200-day SMA looms far above at $106,925, indicating that the longer-term structure remains bearish. For bulls to gain confidence, a daily candle closing above $89,500—corresponding to the 50% Fibonacci level—would be a critical confirmation, potentially opening a path toward $92,202.
On the macro front, sentiment is cautiously optimistic despite near-term headwinds. The market has priced in a delay in Federal Reserve rate cuts, with the implied probability of a January 2026 cut dropping to 14.9% from 23% in November. Yet, expectations are building around a potential expansion of the Fed’s balance sheet later in 2026—a form of quantitative easing that could inject fresh liquidity into financial markets. Abra CEO Bill Barhydt recently emphasized this narrative as a potential tailwind for risk assets like Bitcoin. This evolving outlook has helped temper bearish sentiment, even as actual monetary conditions remain tight. Notably, Bitcoin’s 60-day price correlation with the S&P 500 has climbed to 0.78, underscoring its renewed role as a barometer of broader risk appetite.
Taken together, Bitcoin’s recent uptick reflects a tentative rebalancing between supply and demand, technical relief from oversold conditions, and a macro narrative that, while not yet bullish in practice, is turning more favorable in expectation. However, structural risks persist. Persistent ETF outflows and a market increasingly driven by derivatives—spot ETF volumes are now dwarfed by futures activity, with some estimates suggesting futures account for over 20 times the ETF trading volume—undermine conviction in any sustained upside. The critical level to watch remains $86,600, the 0.786 Fibonacci support. A decisive breakdown below this threshold could invalidate the short-term rebound and open the door to a retest of November’s $80,000 lows. Until then, Bitcoin appears to be navigating a narrow corridor between relief and resistance, awaiting clearer signals from both on-chain behavior and central bank policy.
