Key Insights:
- Bitcoin price failed to hold above the $95,000-$98,000 resistance zone after peaking at $97,850 in mid-January. BTC retraced more than 10% as spot momentum faded.
- No single distressed cohort drove the drawdown, as miners already de-risked at higher levels while whales executed tactical distribution against lean exchange inventories.
- A clean BTC USD price break through resistance requires renewed spot and ETP demand, along with continued easing in long-term holder distribution.
Bitcoin (BTC) price rejection at $97,850 in mid-January revived questions about who was selling and why the BTC USD price struggled to reclaim key resistance. Flow data pointed to shallow liquidity paired with leverage, not miner capitulation or whale panic, as the structural driver behind Bitcoin’s volatility.
Bitcoin Miners De-Risked Early, Whales Took Profits at Highs
Miners already supplied the market at Bitcoin’s $110,000-$120,000 highs. The Miners’ Position Index spiked to +2-3 at those levels. It indicated aggressive inventory monetization, according to a January 26 analysis by Novaque Research.
Since the fourth quarter of 2024, MPI compressed around zero and recently printed near -1.5. That signaled miners were selling less than their one-year average. Miners were not the marginal forced sellers in the current drawdown.
Whales dominated modest inflow streams, but absolute deposits remained well below prior spike highs.
The Exchange Whale Ratio sat toward the upper end of its recent 0.4-0.6 range. That implied tactical distribution rather than capitulation, Novaque Research reported. Previously de-risked miners and opportunistic whales were selling into rallies against lean exchange inventories.
Exchange reserves continued to grind lower over longer horizons, from approximately 2.95 million BTC to 2.73 million BTC. It left the structural spot inventory tight, even after the correction.
Structurally low exchange reserves meant that even modest selling pressure could move the Bitcoin price abruptly when paired with elevated leverage.
Bitcoin USD Faces Overhead Supply Between $93k and $110k
Bitfinex’s January 26 Alpha report framed the selloff as “distribution into upside” rather than a disorderly unwind. Derivatives positioning “reset in an orderly manner,” with volatility concentrated in very short-dated contracts.
The report identified a dense long-term holder supply zone between roughly $93,000 and $110,000. The long-term holders remained net sellers but at a sharply slower pace than during prior peaks.
Realized profits dropped to approximately 12,800 BTC per week from cycle peaks above 100,000 BTC per week, Bitfinex calculated. The easing in LTH sell pressure increased the odds that Bitcoin could absorb overhead supply if spot demand persisted.
The lack of a single distressed seller clarified the real culprit: shallow liquidity. With exchange reserves at multi-year lows and LTH supply concentrated in a narrow band, even orderly distribution from profit-takers triggered outsized moves.
Leverage amplified these swings, turning modest selling into rapid drawdowns.
Flow Regime Shift Determines Bitcoin Price Direction
VanEck’s January 22 Bitcoin ChainCheck quantified the flow regime shift: ETP inflows totaled $440 million over the past 30 days versus outflows of -$1.3 billion over the prior 30-day period, with a burst of +$1.66 billion across January 12-14.
Bitfinex warned that without renewed spot and ETF demand, BTC was likely to remain range-bound.
The sharp ETP inflow supported the mid-January push toward a $97,850 burst. When those flows faded, spot momentum evaporated, and the Bitcoin price retraced. The pattern confirmed that reclaiming $95,000-$98,000 required sustained ETP inflows rather than episodic spikes.
Bitfinex documented a material short squeeze during the mid-January rally. It cited the largest single-day short liquidations in almost 100 days.
Open interest around $32.4 billion and 90-day perpetual funding near 4.8% reflected a reset in leveraged positioning. The clearing event reduced the risk of a vertical unwind but removed the fuel for a reflexive squeeze higher.
Fed Meeting and Rates Path
The Federal Reserve’s January 27-28 meeting anchored rates-path uncertainty, with market-implied probabilities heavily skewing toward a hold. The 10-year Treasury yield traded around 4.24%, within the 3.9%-4.4% band that analysts framed as manageable for risk assets, according to FRED data.
Real 10-year yields hovered near 1.92%, while the VIX sat around 16, consistent with contained macro volatility. Bitcoin’s sensitivity to liquidity conditions positioned it as a proxy for rates and flows.
A late-December note by Bitfinex explicitly linked BTC performance to Treasury issuance and quantitative tightening dynamics. It argued that liquidity would increasingly drive Bitcoin’s USD performance.
VanEck documented materially lower trailing 30-day Bitcoin volatility alongside a 30-day return of +12%, consistent with a grind rather than panic. The combination of orderly derivatives resets and easing LTH distribution created a tradable range setup.
What Bitcoin Price Needs to Reclaim the $97k Level?
A clean break back through $95,000-$98,000 required three conditions: renewed spot and ETP inflows, continued easing in long-term holder distribution, and stable Fed policy signaling that kept real yields contained.
The BTC USD price was trading more like macro-sensitive infrastructure, driven by liquidity and rates, with a visible market-structure gate at LTH supply zones. Bitfinex’s resistance map remained clear. The overhead holder supply between $93,000 and $110,000 needed to be absorbed through persistent spot demand.
Without that bid, Bitcoin price was likely to face choppy, supply-heavy bounces in an orderly early-bear digestion phase rather than a disorderly unwind.
The net result was a supply-absorption test rather than a leverage test. Reclaiming $97,000 was less about liquidations clearing and more about whether institutional flows via ETPs could provide the sustained bid needed to work through the dense LTH supply zone.