Bitcoin dropped to $88,267 but analysts believe a short squeeze could push prices back toward six figures
Bitcoin tests critical support after sharp decline
Bitcoin has experienced a notable downturn alongside the broader cryptocurrency market since early November, reaching a six-month low of $88,267 on Thursday. The decline has eliminated several key support levels that previously provided price stability throughout the year.
The BTCUSD pair surrendered the 50-week exponential moving average around $100,000 and the yearly open at $93,300. These technical breakdowns have created uncertainty among market participants about whether the bull market has concluded or if Bitcoin is establishing a foundation for recovery.
With important economic data scheduled for release Thursday and Friday, markets could experience volatile price swings toward critical Bitcoin price levels over the coming days. This uncertainty has traders watching specific price zones that could determine the asset’s near-term direction.
Key price level could restore bullish momentum
Private wealth manager Swissblock identified Bitcoin’s current position around $90,000 as reaching cycle-level exhaustion. Analysis revealed that Bitcoin’s price momentum has dropped to levels where it previously bottomed in March and following the Oct. 10 market crash.
The firm suggested this exhaustion level represents where bottoms typically form. However, they emphasized that reclaiming the $97,000 to $98,500 range would flip momentum constructive, while failure to do so would hand bears full control of price action.
Glassnode analysts echoed similar observations, noting the area between $95,000 and $97,000 where the negative one standard deviation short-term holder cost basis currently sits is acting as local resistance. Reclaiming this zone would provide an early indication that markets are moving back toward equilibrium.
Breaking downtrend requires clearing local resistance
Bitcoin faces an immediate hurdle at the local high of $94,000, which represents a key demand zone according to trader Daan Crypto Trades. Breaking this level would disrupt the current downtrend and potentially open the door for further recovery.
Glassnode’s Cost Basis Heatmap shows more than 290,300 BTC were acquired at this price point, creating significant support if Bitcoin can reclaim this area. The concentration of coins at this level suggests many holders have a vested interest in defending these prices.
The technical structure indicates Bitcoin needs to overcome multiple resistance layers before establishing a convincing reversal pattern. Each successive level presents challenges as the asset attempts to regain lost ground from the recent selloff.
Liquidation clusters could fuel rapid ascent
Several traders are targeting a liquidity grab near $98,000, with data from CoinGlass showing the price consuming liquidity around $92,000. More than $2.1 billion in ask orders are positioned between $96,600 and $98,500.
If Bitcoin breaks through the $98,000 level, a short squeeze to $100,000 could materialize. Bitcoin trader AlphaBTC described this as a juicy area to target above the early November consolidation, referring to the zone between $100,000 and $104,000.
The trader expressed interest in whether Bitcoin can make an attempt back toward those levels before the Thanksgiving holiday. This timeline suggests the next several days could prove crucial for determining whether the asset can stage a meaningful recovery.
Early stabilization signals emerge in ETF flows
US spot Bitcoin exchange-traded funds logged $75 million in inflows on Wednesday following five consecutive days of outflows. This shift hints at early stabilization in Bitcoin markets as some investors view current prices as attractive entry points.
The return of inflows after an extended period of redemptions suggests investor sentiment may be shifting. While $75 million represents a modest amount compared to earlier peak inflow days, the directional change could signal growing confidence among institutional participants.
ETF flows often provide insight into institutional sentiment and can precede broader market moves. The Wednesday inflows occurred as Bitcoin tested support levels, potentially indicating strategic accumulation during the downturn.
Market participants remain divided on outlook
Current price action has created mixed sentiment among cryptocurrency market participants. Some view the decline as a healthy correction within an ongoing bull market, while others question whether the uptrend has concluded.
The close your eyes and bid mentality expressed by some analysts suggests extreme conviction that current levels represent attractive long-term value. This perspective assumes temporary price weakness will eventually give way to renewed strength.
Conversely, bears point to the breakdown of key support levels as evidence that momentum has shifted. The loss of the $100,000 area and yearly…