Bitfinex Analysts Warn of Bitcoin’s Delicate Balance Amid Declining Institutional Interest

Bitcoin’s upward momentum in January has diminished, with the top cryptocurrency retreating over 10% from its mid-month high as institutional interest wanes and exchange-traded fund (ETF) flows turn sharply negative.

The latest Alpha report from Bitfinex reveals that bitcoin was unable to break through the resistance zone between $95,000 and $98,000. It peaked at $97,850 before falling back into its previous trading range. This decline wiped out all gains made so far this year and pushed prices below the annual opening level, highlighting what experts call a “delicate balance” between buyers and sellers.

This pullback coincides with persistent selling pressure from U.S.-based spot bitcoin ETFs. Data from Bitfinex indicates cumulative ETF outflows exceeding $1.3 billion over the past week, including five straight days of net redemptions across major providers. Analysts interpret these widespread and consistent withdrawals as coordinated risk reduction rather than normal portfolio adjustments.

Bitfinex analysts commented that without fresh ETF inflows, attempts to push prices higher are likely to fail since institutional demand has “significantly weakened at current price points.”

Onchain data suggests short-term holders have absorbed most of the recent downward movement. Bitcoin’s price repeatedly stalled near the realized price level for short-term holders—a critical pivot point observed across multiple market cycles. Bitfinex noted that while buyers continue to emerge during dips, rallies are met by selling pressure primarily from investors who accumulated coins during early 2025.

In contrast, derivatives markets have remained relatively stable. Open interest in perpetual contracts dropped by more than 4%, roughly equating to a $1.18 billion decrease in notional value after bitcoin’s January peak. Analysts view this adjustment as constructive for market structure despite cooling activity in spot markets.

The options market presents a similarly complex picture: one-week at-the-money implied volatility surged by over 13 points following recent declines; meanwhile three-month implied volatility increased only slightly and six-month volatility stayed mostly steady. This front-end curve steepening signals tactical hedging rather than broad repositioning among traders.

According to Bitfinex:

“The sharp rise in short-dated implied volatility shows participants are making tactical moves instead of reevaluating medium-term risks.”

“When changes concentrate on near-term volatility alone, it usually reflects event-driven uncertainty rather than signaling a fundamental shift toward higher overall market turbulence.”

Put simply, traders seem prepared for imminent news events but aren’t altering their long-range strategies significantly yet. The options market is pricing temporary risks instead of anticipating lasting disruptions—longer-dated expectations remain largely unchanged despite elevated noise near term.

Adding complexity are macroeconomic factors: geopolitical tensions earlier this month triggered risk-off sentiment globally after renewed tariff threats linked to U.S ambitions concerning Greenland surfaced briefly before easing off again.
Bitfinex remarked that these developments reinforced an ongoing broader reassessment of risk across equities, bonds & currencies alike.

Also read: Blackrock Pushes Deeper Into Bitcoin Filing ETF Built for Both Exposure & Income

Despite this setback analysts emphasize such corrections within larger uptrends aren’t unusual.
What truly matters is whether strong spot demand reemerges.
Without it bitcoin seems poised merely to trade sideways instead of continuing upward momentum.

“Having slipped back into an established range between $85K–$94,&nbsp500,” they wrote,
“a robust return of spot buying is essential for any sustained breakout.”
Repeated failures near resistance levels historically prolong consolidation phases rather than resolve them quickly.

Currently,
the market appears stuck:
sellers remain active,
buyers cautious,
and heightened volatility warns without confirming any definitive regime change.
Until ETF flows reverse or spot purchases gain strength again,
bitcoin’s next significant move may stay frustratingly elusive.