Bitcoin Retreats to $90,500 After Rally Fails to Break $95,000

Bitcoin (BTC) rebounded to $90,500 Thursday morning after earlier dipping to around $89,300, marking its third straight day of pullback. The decline follows a brief early-year rally that pushed BTC just under $95,000 on Monday but failed to sustain momentum, according to crypto trading firm Wintermute.

“After initial re-risking from the yearly open, the market failed to break the key $95,000 level, resulting in two-way trade as ETF outflows dominated the last two sessions,” said Jake Ostrovskis, head of OTC at Wintermute. Analysts also pointed to lighter trading volumes and profit-taking as factors behind the retreat.

Expectations for a near-term Federal Reserve rate cut have weakened further. CME FedWatch data shows the probability of easing at the Fed’s January 28 meeting has fallen to 11.6%, down from 15.5% a week ago and 23.5% a month ago.

Support Holds Near $89,200

Bitcoin tested the 50-day moving average, a key technical level, which provided support near $89,200 during today’s bounce.

Leverage and Liquidation Risks Remain Elevated

Open interest in BTC futures and options has climbed to nearly 700,000 BTC, a three-week high and roughly 75,000 BTC above the start of the year, suggesting traders are adding exposure rather than reducing risk.

Perpetual futures funding rates remain positive at about 0.09%, indicating long positions are paying shorts to maintain exposure. While traders continue buying dips with leverage, crowded long positions increase the risk of forced liquidations, which could amplify selling pressure if prices fail to rise.