Bitcoin (BTC) experienced a sharp pullback during the Asian market open, effectively shaking out leveraged positions without compromising its underlying market structure. While market sentiment cooled rapidly following this movement, onchain and derivatives data suggest that the dip is more indicative of a structural reset rather than a deeper trend reversal.
Key takeaways from the recent market activity include:
- •Approximately $233 million in Bitcoin long liquidations occurred, which served to flush out leverage. This happened while spot selling remained muted, pointing towards a market reset rather than panic distribution.
- •Market sentiment saw a significant collapse, falling from 80% to 45%. This cooling of sentiment was confirmed by a drop in open interest to $28 billion, indicating a mild unwinding of risk-off positions.
Bitcoin Dip Flushes Leverage as Sentiment Cools
Bitcoin's price fell from $95,300 to $91,800, marking a 3.7% decrease during the Asian market open on Monday. This downturn triggered approximately $233 million in long liquidations over the preceding 24 hours. This price action followed a period characterized by elevated bullish positioning, which left the market susceptible to a downside sweep.
Bitcoin researcher Axel Adler Jr. observed that Bitcoin’s Advanced Sentiment Index experienced a sharp decline, dropping from 80% to 44.9%. This index, which integrates several key metrics including volume-weighted average price (VWAP), net taker volume, open interest, and volume delta, had previously reached extreme bullish levels between January 13th and 15th. These levels aligned with a local price high approaching $97,000.
The fall below the neutral 50% threshold signifies a shift towards weaker risk conditions in the market. According to Adler, for price stabilization to occur, a sustained recovery above the 50% mark would be necessary. Conversely, a further slide towards the 20% zone could increase the probability of a more significant correction.
Bitcoin's open interest also saw a decline, returning to its yearly opening levels of approximately $28 billion. This suggests that leveraged positions were unwound rather than new short positions being aggressively initiated. The aggregated futures cumulative volume delta (CVD) remained slightly elevated relative to open interest, while spot CVD stayed flat. This indicates that selling pressure driven by spot market activity was limited.
Will Traders Cut and Run, or Buy the Dip?
From a technical analysis perspective, Bitcoin continues to exhibit a pattern of higher highs and higher lows on its daily chart. The price region between $92,000 and $93,000 aligns with a daily order block demand zone. This area also represents a retest of the rolling monthly VWAP support, positioning it as a plausible higher-low area before another potential upside attempt towards the $100,000 mark.
Data from Hyblock Capital also indicates that approximately $250 million in net long positions were filled near the $92,000 level over the past day. This suggests demand from dip buyers rather than widespread capitulation.
In the short term, price action may consolidate within this order block range, provided Bitcoin maintains its position above $90,000. With US equity markets closed on Monday, clearer directional pressure is anticipated to emerge on Tuesday, potentially allowing bullish sentiment to reassert control.
