3 Reasons Why Bitcoin’s Early 2026 Recovery May End Soon
Bitcoin's (BTC) recovery in early 2026 may not last long, as new data points to heightened selling pressure. Traders holding long positions may need to consider counterfactuals to reduce risk.
On-chain data shows that Bitcoin Well exchanges are increasing their activity. This behavior is especially dangerous in low volume environments.
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Bitcoin Whale's revenue spikes in January
One of the most alarming signs is the All Exchanges Whale Ratio (EMA14), which has reached its highest level in ten months.
This measure represents the ratio of the top 10 earnings and total exchange flows. Higher values indicate that whales are using exchanges more intensively.
Although Bitcoin currency stocks continue to move downwards due to demand from DATs and ETFs, the sudden increase in this ratio can be a pre-warning. It suggests that BTC balances on exchanges may start to increase again.
“This development coincides with the price of Bitcoin trying to recover after a correction phase. The pattern suggests a potential strategy of whales to capitalize on buy-side liquidity to take profits and use the current market as an exit liquidity,” CryptoOnchain, an analyst comment on CryptoQuant.
In addition, the ever-deteriorating market liquidity increases the risk of significant price fluctuations and volatility.
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According to a post on Glassnode X, spot trading volume for bitcoin and altcoins has fallen to its lowest level since November 2023.
“This weak demand is in stark contrast to the movements in the market. It shows thin liquidity conditions that are increasing behind the recent price strength,” Glassnode reported.
In a low-liquidity environment, only limited buying pressure is needed to push prices higher. Conversely, a modest sales push can easily trigger large side effects.
If whales on exchanges start selling as suggested, coupled with thin liquidity, Bitcoin's more than 6% recovery and overall altcoin market capitalization's 10% recovery could soon be over.
In addition, analyst Willie Wu pointed out the sharp decline in Bitcoin transaction fees, describing the market as a “ghost town.”
Charts tracking collection and transaction fees show activity on the chain at a very low level. Both indicators have fallen sharply, indicating a downturn in the trade. Reduced activity on the chain indicates poor capital inflows and outflows, making the market volatile.
As liquidity reaches the bottom of the area in January, Wow expects a short-term pump. However, the long-term view remains boring due to the lack of real activity.
In the short term, some analysts expect Bitcoin to correct to the $90,000 and $88,500 zones. These standards also align with the newly created CME gap.
