Bitcoin's recent rally faced strong resistance at the $94,000 level, despite the Federal Reserve's decision to cut interest rates. After a volatile week, Bitcoin briefly surged above $94,000 following the Fed's announcement of a 25 basis points rate cut, bringing the benchmark rate down to 3.50%-3.75% in an effort to support employment and curb inflation. However, this upward momentum proved unsustainable, and Bitcoin has since retreated, leaving investors and analysts pondering the reasons behind the failed breakout.
Several factors appear to be contributing to Bitcoin's struggle to overcome the $94,000 hurdle. One significant element is the cooling of spot Exchange Traded Fund (ETF) inflows. These ETFs had previously provided substantial buy-side support during rallies; however, with inflows moderating, Bitcoin has found it challenging to absorb sell pressure at higher price levels. Profit-taking near recent highs has also played a role, as short-term traders capitalize on gains, thereby capping further upward movement.
The $94,000 level represents a confluence of technical resistance. It aligns with the 0.618 Fibonacci retracement level, the Value Area High (VAH), and a high-time-frame (HTF) rejection point, creating a formidable barrier for bulls. Bitcoin has repeatedly failed to decisively close above this zone, indicating significant selling pressure and a lack of sustained buying interest.
Derivatives metrics offer further insights into the market's dynamics. Falling open interest since late November, coupled with a rising perpetual cumulative volume delta, suggests that recent price increases may be driven by short-covering rather than genuine bullish conviction. This indicates that traders who had previously bet against Bitcoin are now closing their positions, contributing to the upward price movement, but not necessarily reflecting a fundamental shift in market sentiment. Furthermore, funding rates and the Coinbase premium remain indecisive, providing no clear signal of strong bullish sentiment. Spot and perpetual order-book depth have also flipped negative since early December, underscoring weak spot demand and highlighting the need for renewed spot Continuous Volume Delta (CVD) and rising open interest to sustain a genuine uptrend.
Technical analysis reveals a bearish structure in the short to medium term. Bitcoin is trading within a defined descending channel, with repeated failures to break above the upper boundary. The most recent swing high near the $94,000-$95,000 region coincided with a key daily supply block, which once again rejected upward momentum and preserved the broader bearish outlook. The price is also below the point of control, which signals increased downside risk.
The recent Federal Open Market Committee (FOMC) meeting added another layer of complexity. While the rate cut initially triggered a positive price reaction, the market quickly retraced, suggesting that the impact of the policy shift may already have been priced in or that other factors are overshadowing the effects of monetary easing. The market is closely watching for further signals from the Fed regarding future monetary policy, which could significantly influence Bitcoin's trajectory.
Looking ahead, Bitcoin's ability to establish a firm foothold above $94,000 will be crucial for determining its next move. A decisive break above this level could trigger further upside momentum, potentially opening the door for a test of higher resistance levels around $101,000 and $104,000. Conversely, failure to overcome this barrier could lead to a deeper correction, with potential support levels around $87,200 and $84,000. A break below these levels could expose liquidity towards $76,510.
