Traders Eye Dollar-Driven Macro Low for Bitcoin Despite $88K Recovery
Analysts caution that Bitcoin may track the US dollar's descent to a prolonged bottom, intensifying challenges for cryptocurrency investors.
Bitcoin (BTC) climbed back above the $88,000 threshold following the opening bell on Wall Street Monday, as market observers maintained that fundamental demand remains "intact."
Key points:
- Bitcoin works to sustain its rebound following the establishment of fresh 2026 lows at $86,000.
- Market participants anticipate the resumption of downward momentum amid broad uncertainty across financial markets.
- Analysis continues to indicate that Bitcoin maintains a robust demand foundation.
BTC price projected to mirror dollar's descent
Information from TradingView revealed that BTC price movements continued their recovery from fresh 2026 lows observed at the conclusion of the weekly session.
Following a discouraging weekly candlestick that triggered alerts of additional downside potential within cryptocurrency analytics communities, market traders expressed minimal confidence in the durability of Monday's upward movement.
"I believe the maximum extension is likely around 89–91K before further downside," trader Killa wrote in his latest post on X.
Trading peer BitBull identified weakening US dollar power as an indicator for BTC/USD to establish a typical extended-timeframe bottom.
"This is a very crucial chart for $BTC holders," he told X followers alongside a chart of the US dollar index (DXY).
"Whenever DXY has dropped below 96 in the past, Bitcoin has bottomed. Even the 2 biggest rallies in BTC happened when DXY went below 96. And now, the DXY crash seems imminent. We all know what that means."
Declining dollar strength represented merely one component among numerous macroeconomic obstacles confronting risk-asset market participants during the trading session, with Japan, US trade tariffs and the Federal Reserve interest-rate meeting all demanding attention.
An additional concern emerged in the possibility of a US government shutdown becoming operational starting Jan. 30.
"The situation bears resemblance to last autumn's protracted fiscal standoff, which coincided with a sharp drawdown in crypto markets," trading outfit QCP Capital wrote in its latest "Asia Color" market update.
QCP forecast that crypto markets were "likely to chop around in the near term, pending greater clarity, particularly around the risk of a U.S. government shutdown."
IG: Bitcoin evading structural "breakdown"
From a more encouraging perspective, nevertheless, fresh research published by CFD and forex provider IG during the trading day maintained confidence in Bitcoin's foundational resilience.
Despite the numerous macro challenges and underwhelming performance relative to equities and alternative assets, BTC continues to benefit from a solid demand foundation, IG contended.
"Despite the sharp decline, the Monday's recovery suggests that underlying demand remains intact," the research stated.
"Longer-term investors appear more willing to absorb supply at lower levels, viewing the move as a correction driven by positioning and macro shocks rather than a breakdown in Bitcoin's structural outlook. This helped prices stabilise and rebound, even if the recovery has so far been measured rather than decisive."
IG identified resistance zones in the vicinity of $94,000 and $100,000 as extended-timeframe objectives, with $86,000 remaining critical to defend should another downturn materialize.
"Looking ahead, Bitcoin's near-term trajectory will likely depend on whether broader market conditions stabilise and whether buyers can build on the recovery without renewed selling pressure," it added.
"For now, the sharp sell-off and subsequent minor rebound serve as a reminder that even in a more mature phase of the cycle, Bitcoin remains highly responsive to shifts in sentiment, liquidity and risk appetite."