The cryptocurrency market is experiencing a return to a state of intense volatility, something that seasoned investors are well-acquainted with.
Notorious for their price swings, the current surge in the swinginess of prices has sent many investors scurrying to their on-chain accumulation data for greater insights. In the realms of potential support and resistance, on-chain data seems to be hitting the nail right on the head when it comes to Bitcoin. Current data suggest a price point that’s very much in play at present is right around the $96k level. For traders and holders alike, this is an increasingly concerning point.
Bitcoin Faces Resistance as Losses Mount for Holders
On-chain data shows that Bitcoin (BTC) is now up against a huge resistance level at around $96,000. This level is significant because it’s roughly where 1.66 million BTC are held by investors who bought at a higher price. If the price of BTC had dropped to, say, $20,000, those investors would have written off that purchase as a loss and moved on. But because the price is hovering near their entry point, many of these underwater holders might feel the need to sell at $96,000 in order to at least pay off the debt they incurred with that purchase.
Volatility has returned to crypto, and on-chain accumulation data can be invaluable in pinpointing potential support and resistance zones.
In the short term, a key resistance level appears around $96k, where roughly 1.66 million BTC is currently being held at a loss. Fearful… pic.twitter.com/nnrkRTqP6H
— IntoTheBlock (@intotheblock) March 3, 2025
In cryptocurrency markets, the decision made by many to sell when they’ve reached their break-even points is quite common, especially during times of uncertainty. At such times, even a moderate amount of selling may create a substantial level of selling pressure, making it difficult for Bitcoin to achieve any kind of sustained upward movement—especially if the upward price target is $96k. The longer the price stays below $96k, the more it appears that the market itself may be forcing some sellers to exit at their break-even points below $96k. Meanwhile, the market has already shown us that it can create a level of selling pressure when it appears headed towards a smooth and sustained retracement. And this event may be pivotal.
ETF Outflows Reflect Waning Confidence Amid Volatility
The recent flows into Bitcoin ETFs have also caused concern in the market. Between Feb. 24 and Feb. 28, Bitcoin spot ETFs saw significant outflows. In that five-day window, ETF outflows totaled $2.61 billion; this wasn’t just taking money out of ETFs and moving it onto the Bitcoin blockchain—that’s somewhere we might expect there to be a healthy amount of accumulation if confidence in Bitcoin is as strong as some say it is. This wasn’t.
The outflows suggest that institutional investors—who usually drive much of the liquidity in Bitcoin markets—may be taking a more cautious stance amid increasing volatility. The large withdrawal figures could mean that these investors are looking for safer, more stable assets or are unwilling to expose themselves to the kind of risks that crypto assets seem to be presenting. And we know from past experience that the kind of price fluctuations we’re seeing now (with the kind of mutations we’re seeing now from day to day) are not good for Bitcoin’s institutional image.
Last week (February 24 to February 28, ET), Bitcoin spot ETF had a net outflow of US$2.61 billion; Blackrock ETF IBIT had a net outflow of US$1.17 billion; Ethereum spot ETF had a net outflow of US$335 million. https://t.co/YanotfbWiJ
— Wu Blockchain (@WuBlockchain) March 3, 2025
The Impact of Market Sentiment on Bitcoin’s Short-Term Outlook
These factors—on-chain data revealing significant BTC holdings sold at a loss and the outflows from ETFs that are big enough to make a dent—point to the short-term forecast for Bitcoin being swayed by sentiment, which is not something you want if you’re bullish. Fear permeates the market when sentiment is on the downswing, and that pushes actual Bitcoin sales down, as appears to be the case now. Of course, when fewer actual Bitcoins are sold at higher prices, that pressure seems to be pushing the price down toward the $96k resistance zone.
At present, the tug-of-war over the price action of Bitcoin appears to revolve around who is doing the accumulating and where the accumulation is happening. Long-term holders have apparently chosen this moment to step in and begin some accumulation of their own, at least on the types of exchanges where on-chain data is available. But not all accumulation is happening on OTC desks or by custodians holding private keys. And while the price action of Bitcoin is still highly volatile, there is now a picture emerging from on-chain data as to what might be the major price support and resistance zones.
With the return of volatility to the crypto market, the path ahead for Bitcoin will likely be influenced by a combination of technical and external factors. On the technical side, accumulating on-chain and reaching key resistance levels like the $96,000 target will be crucial. But we also shouldn’t ignore the significance of external elements like ETF outflows that could tip the market. If the holders’ sentiment is positive, then overcoming $96,000 will be more likely, but if the opposite is true, we’re in for a short retracement.
It will be very important for investors to understand these essential data points and market signals if they hope to navigate the current volatility and make well-informed decisions while Bitcoin tries to reestablish itself in a turbulent market.
Yet with support and resistance levels that seem to be in constant transition, how can one hope to stay on top of things? One approach is to obsess over these on-chain and market-wide developments and look to capitalize on them as future opportunities.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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Source: https://nulltx.com/volatility-returns-to-crypto-market-as-bitcoin-faces-key-resistance-levels/