Bitcoin Sell-Off Deepens, Yet History Hints At a Price Bounce

Bitcoin has faced renewed selling pressure, with the price slipping below the $80,000 mark after a sharp pullback. The decline followed broader market weakness and rising risk aversion. 

Although large wallet holders reacted defensively, several underlying bullish signals suggest Bitcoin may be positioning for a short-term recovery as selling pressure shows early signs of saturation.

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Bitcoin Large Holders Exit

On-chain data indicates notable risk reduction among large Bitcoin holders throughout January. Wallets holding balances exceeding $100,000 and $1 million in BTC collectively declined by approximately 166,000 addresses over a two-week period. These cohorts typically represent institutional participants and high-net-worth investors, whose positioning often has an outsized impact on liquidity and directional price action.

Such distribution phases tend to exacerbate downside volatility, as the withdrawal of large holders reduces passive buy-side support. However, history shows that these periods frequently coincide with late-stage corrections, where leveraged or weak hands are flushed out while longer-term participants gradually absorb supply.

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What Does Bitcoin’s Past Say?

Market sentiment remains decisively bearish across both social and quantitative indicators. Data from Santiment shows bearish crypto commentary has surged to its highest level since the November 21 market crash, reflecting elevated fear and capitulation among retail participants.

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From a contrarian perspective, sentiment compression at these extremes has historically aligned with local market troughs. Prior cycles suggest that when pessimism becomes one-sided, marginal sellers diminish, allowing price to stabilize and rebound—provided macro conditions and liquidity do not deteriorate further. This environment increases the probability of a tactical bounce rather than a continued impulsive downside.

BTC Price Could Bounce Back

Bitcoin is currently trading near $78,848 after rebounding from the $75,000 demand zone, which marked a recent swing low and attracted aggressive spot buying. While the broader structure remains corrective, momentum metrics indicate that downside pressure is decelerating, creating a more constructive short-term setup.

On lower timeframes, BTC is developing a bullish divergence, with CMF printing lower highs while price posted marginally lower lows. This divergence typically signals improving bid strength beneath the surface as capital inflows strengthen and often precedes relief rallies during downtrends.

If confirmed, Bitcoin could reclaim the $80,000 level, which now acts as immediate overhead resistance. A sustained acceptance above this zone would likely open upside continuation toward $84,698. A successful flip of this level into support would materially improve market structure and increase the probability of a broader recovery toward $89,241, aligning with prior consolidation and volume nodes.

That said, downside risk remains intact should bearish sentiment intensify. A loss of the $75,000 support—previously defended during the April 2025 crash—would invalidate the short-term bullish thesis. This would expose BTC to deeper downside toward the $70,000 region or lower. For now, price action suggests Bitcoin is at a critical inflection point between further distribution and a potential corrective rebound.