Bitcoin is stabilizing after a big sell-off, but market sentiment suggests the recovery remains fragile. A combination of ETF outflows, a decline in derivatives leverage, and neutral momentum indicators is signaling a consolidation phase rather than a trend reversal, which is why traders are watching for a potential directional breakout.
Earlier this week, Bitcoin dropped below key support levels, descending under $87,500 and briefly trading below $86,500.
Gradually, buyers started building positions near $85,000, helping BTC create a short-term base and kick off a slight rebound.
However, the coin continued to trade below $88,000 and remained below the 100-hour simple moving average, indicating ongoing short-term weakness.
A descending trend line on the hourly chart places immediate resistance near $88,500. A stronger resistance is at $89,350, aligned with 50% Fibonacci retracement of the recent fall from the $93,560 high to the $85,151 low.
A sustained close above this zone could shift the sentiment to bulls and open the door toward $90,000-$91,200.
ETF data adds caution to the outlook. BTC spot ETFs saw a net outflow of $277.09 million yesterday, which indicates short-term institutional risk-off behavior.
The cumulative net inflows are still more than $57 billion, and total ETF assets have gone above $114 billion; however, the recent outflows indicate investors are taking profits rather than building new positions at the current level.
CoinGlass data shows that the Open Interest (OI) has decreased by 3.41% in the last 24 hours to $58.43 billion. Also, the notional value of active positions is declining, which indicates that the risk of sentiment is increasing.
Falling open interest combined with consolidating prices often signals that the market is rebuilding positions, increasing the probability of a sharp breakout once new conviction returns.
Also, the OI-weighted funding rate is in the positive territory at 0.0063% indicating traders are building long positions.
Also Read: Why Bitcoin’s Available Supply is Much Lower Than You Think
Immediate support can be seen at $87,500 and $85,500. A fall below these levels could expose deeper correction towards the $83,000 level.
On the upside, resistance is at $88,500 and $89,350. A decisive move above this resistance level would be a sign of renewed bullish momentum.
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