Bitcoin could fall below $88K if it fails to maintain $95K support

Bitcoin is currently facing a pivotal point in its price action, with a potential for a sharp decline if it fails to hold onto the critical support level at $95,000. According to market analyst Skew, Bitcoin’s price recently experienced a 6% drop, falling below $96,000, largely driven by a sell-off triggered by broader macroeconomic concerns. This has contributed to an 8.4% slump in the global cryptocurrency market, raising alarm among traders and analysts alike. Skew suggests that if Bitcoin continues to struggle at this level, it could experience further downside, possibly reaching as low as $88,000.

The $95,000 support level is crucial, as it is seen as a key marker for the market’s sentiment towards Bitcoin’s future trajectory. Skew points out that a drop to this level—just $300 away from the current price at the time of writing—could cause Bitcoin to retest lower levels around $88,000. This is supported by an analysis of the liquidity blocks on exchanges, especially on Binance, one of the largest cryptocurrency exchanges in terms of trading volume. The liquidity near $88,000 is notably higher, with a significant increase in demand around this price point.

The bearish outlook is reinforced by the uptick in selling pressure on Binance, where the hourly Net Taker Volume recently turned sharply negative, hitting a yearly low of -$325 million. This occurred during the release of the ISM PMI and JOLTs Job Openings data, which painted an unfavorable picture for risk assets like Bitcoin. Analysts are closely monitoring this development as it could signal further downward pressure on Bitcoin’s price in the short term.

Moreover, other analysts, including fellow trader Johnny, have also expressed concerns about a potential dip into the $88,000 range over the coming weeks, with Bitcoin struggling to maintain key levels. Another well-known pseudonymous analyst, Rekt Capital, stated that Bitcoin is now fluctuating within the $91,000 to $101,165 range after failing to hold onto the critical daily support level at $101,165. As a result, Bitcoin could continue to oscillate within this range, with $91,000 now acting as the next key support level for the cryptocurrency.

Despite these bearish predictions, the on-chain data paints a somewhat different picture, suggesting that there may be a stronger underlying demand for Bitcoin than the price action currently reflects. According to data from IntoTheBlock, net withdrawals from exchanges surged significantly from 346.47 BTC on January 6 to 1.85K BTC on January 7. This increase in withdrawals indicates that investors are likely moving their holdings from exchanges to personal wallets, suggesting that they intend to hold their Bitcoin for longer periods. This could result in reduced sell-off pressure, which may support Bitcoin’s price in the medium term.

Additionally, the Chaikin Money Flow (CMF) index, which tracks the flow of money into and out of Bitcoin, remains positive at 0.09 on the 1-day BTC/USDT chart. A positive CMF indicates sustained buying pressure, which could help mitigate the negative price action seen in the short term and provide support for a potential upward move. This aligns with the bullish narrative presented by CryptoQuant CEO Ki Young Ju, who emphasized that the Apparent Demand for Bitcoin remains very high. The Apparent Demand indicator compares the number of newly mined coins with the number of coins held for over a year, and a high reading suggests that investors are confident in Bitcoin’s long-term potential.

In conclusion, while there is a growing concern among analysts about Bitcoin’s immediate price action and the potential for further downside, there are several positive factors that could provide support for the cryptocurrency. The strong on-chain metrics, including rising withdrawals and continued buying pressure, suggest that Bitcoin’s demand remains robust, despite the bearish sentiment in the market. Therefore, Bitcoin may still have the potential for recovery, but it will depend on how the market responds to upcoming macroeconomic events and investor sentiment in the coming weeks.