Bitcoin spot interest rises, but there is a catch: Bitfinex Alpha

Over the past nine days, bitcoin (BTC) experienced a sharp decline below $90,000 and a strong recovery above $108,500. Analysts at crypto exchange Bitfinex attributed the price revision to increased demand, particularly among US-based crypto exchanges.

According to the latest Bitfinex Alpha report, Bitcoin's recovery has shown relative strength compared to the stock market. The digital asset rose 10% at the end of last week, a move from a high-water mark of more than 18%.

Bitcoin spot demand is renewed

On January 13, BTC dropped to $89,300, which raised about $818 million in short and long liquidity. However, as the inauguration of US President Donald Trump nears, the price of Bitcoin has increased along with local and institutional interest.

During the recovery, the market saw the pressure of aggressive buyers. This is reflected in the high fluctuations in the Spot Cumulative Volume Delta (CVD), which tracks the difference between the market's buys and sells over a period of time. A sharp rise in CVD indicates that buying pressure is dominant in the spot market, buyers are actively raising ask prices, and there is strong demand and potential upside for BTC.

“At a time when traditional markets were about to close, the aggressiveness of spot market buyers reinforces this view, with both short-term holders and institutional investors showing strong interest. Since the US election results were announced in early November, this consistent buying from the US has been key to BTC maintaining its position.”

Kach

While the spot demand recovery is positive for BTC, Bitfinex analysts note a downside: bids take time to fill when the market is experiencing such strong buying pressure. As a result, BTC will pull back a bit, especially if a sell-the-news event occurs.

Long-term traders who bought BTC in anticipation of President Trump's inauguration and the expected pro-crypto environment during his tenure are likely to profit in the coming days, classifying the inauguration as a sell-the-news event. Such investor activity can exacerbate any BTC correction.

BTC has already hit a high of $109,300 just before the launch and is back towards the $101,000 level. However, short-term holders have identified a support/resistance level at $89,438, so it may be difficult for BTC to fall below this range.