Bitcoin is currently trading close to $89,463 as the market consolidates within a tightening range. While prediction markets indicate heightened expectations for a price drop, derivatives data reveals that short sellers are being squeezed, hinting at a possible reversal against the prevailing trend.
Polymarket Reflects Bearish Sentiment
According to Polymarket data, traders are predominantly bearish. The likelihood of Bitcoin falling to $85,000 by the end of January has decreased from 44% earlier this week to 27%. Meanwhile, chances of it dropping further to $80,000 stand at 6%, and only 2% expect it to hit $75,000.
On the flip side, just 4% of participants believe Bitcoin will surpass $100,000 this month. Odds for reaching above $105,000 remain below 2%. This uneven distribution highlights that downside risks currently overshadow bullish hopes.
Interestingly though, these probabilities have shifted recently; the diminished chance for an $85K dip suggests waning bearish confidence despite prices lingering under key resistance points.
Squeeze on Shorts Amidst Negative Outlook
The derivatives market paints a contrasting picture. In the last day alone, short positions worth approximately $85.33 million were liquidated compared with only about $20.38 million in long position liquidations—a ratio indicating overcrowded shorts.
Total open interest slightly declined by about 1%, settling near $58.87 billion while trading volume increased nearly 3.8% reaching roughly $58.75 billion. Options activity surged over 18%, signaling traders are hedging against volatility as price action tightens.
The overall long-to-short ratio hovers around parity at approximately 0.99; however top Binance traders show a bias towards longs with a ratio near 2.37—implying larger investors lean bullish despite cautious retail sentiment.
A dominance of short liquidation during consolidation phases often signals consensus bearish trades that can unwind sharply once momentum shifts occur.
Price Movement Compresses Between Critical Levels
The daily chart reveals Bitcoin moving inside an upward channel originating from December’s low near $80K level—bouncing off support multiple times but struggling to break above combined resistance zones formed by its recent moving averages (20 and 50-day EMAs).
- Main resistances: immediate at around $91,241 (20 EMA), secondary near $91,780 (50 EMA), major hurdle close to $95,218 (100 EMA)
- Additionally: Supertrend resistance stands at $96,483 while longer-term trend resistance aligns with the $98, 846 mark (200 EMA)
- Support lies between roughly $88, 000 and $88, 500 within channel boundaries
- If breakdown occurs below support zone targeting could extend down toward approximately $85, 000
The Supertrend indicator remains bearish confirming sellers hold short-term momentum but overall ascending channel structure implies broader recovery persists provided support holds firm.
Intraday Indicators Show Neutral Momentum
A closer look on shorter timeframes such as two-hour charts shows Bitcoin oscillating between about $ 87, 000 and ~$ 90, 500 over four days forming lower highs yet maintaining steady support levels beneath price action.
- The Parabolic SAR indicator sits just below current prices (~$ 88, 985). A decisive move closing under this would switch its signal negative suggesting imminent weakness in short term.
- The RSI reading hovers neutrally around midpoint value (~48) without clear directional bias reflecting ongoing indecision during consolidation phase.
This tight compression sets up conditions ripe for breakout moves — typically longer periods spent squeezing lead into more powerful directional shifts when resolved .
What Lies Ahead : Bears Or Bulls ?
The present scenario offers mixed cues . Prediction markets favor declines , yet heavy liquidation among shorts indicates crowded bets against bulls . Meanwhile , ascending channels provide sturdy floors even as clusters of exponential moving averages cap upside attempts . Ultimately , resolution hinges upon which camp yields first .
- Bullish Scenario : Price breaks beyond ~$ ;91 ,& nbsp ;000 accompanied by accelerated covering from shorts propels rally toward ~$ ;95 ,& nbsp ;00 followed potentially by tests near Supertrend ceiling @ ~$ ;96 ,& nbsp ;483 .
- Bearish Scenario : & nbsp ;Sustained selling pushes price beneath channel support zone (~$ ;88 ,& nbsp ;00 ) leading daily closes below confirm downside thesis seen in prediction markets targeting ~$ ;85 & nbsp;, & nbsp ;; & lt;/ li >
Currently Bitcoin faces critical crossroads where pessimism embedded in prediction odds confronts derivative positioning suggestive of potential squeeze dynamics — forthcoming sustained movement promises significant volatility release likely producing sharp directional swings.
& #68 isclaimer: The content shared here serves educational purposes only and does not constitute financial advice or recommendations whatsoever.Coin Edition disclaims responsibility for any losses resulting from use or reliance upon information contained herein.Readers should exercise due diligence before making investment decisions.