Bitcoin, buying pressure weakens ahead of historic resistance level

In the New Year market, Bitcoin (BTC) continues to trade within the range of $86,000 to $90,000. While price stagnation persists, complex market signals are emerging from on-chain data, leading to divided opinions among investors on whether to buy.

US Money Cooling Down as Resistance

Notably, the deterioration of the Coinbase Premium, which indicates the price difference between the largest US exchange and global trading platforms, is worth watching. The fact that this indicator has fallen to a negative -0.17, its lowest level since February, suggests a significant decline in demand for Bitcoin among US investors.

Typically, such a tide of US money outflow greatly diminishes overall upward pressure on the market. During periods of declining demand, even with favorable factors, there is a tendency for the market to lack the strength to break through resistance levels. The current sluggishness in Bitcoin prices is partly due to this cooling investor sentiment.

Mining Costs as a Bullish Support

On the other hand, CrypNuevo, an expert in mining cost analysis, presents a positive outlook on the current price environment. He points out that the average cost required for mining is approximately $74,000, indicating a substantial support level below the current Bitcoin price (currently $90.51K).

Historically, mining costs have served as a solid support level. It is rare for this level to be significantly breached for an extended period, and CrypNuevo views the downside potential as “extremely limited.”

The Potential Turning Point Indicated by the Sharpe Ratio

Darkfost, an analyst under CryptoQuant, highlights changes in the Sharpe ratio, which measures risk-reward. The ratio has fallen to a negative -0.5, aligning with the best buying opportunities in past Bitcoin markets.

For highly volatile assets, a decline in the Sharpe ratio indicates not just increased risk but also the realization of unrealized losses and a severely deteriorated market psychology. In such environments, there are often cases where a subsequent bullish trend begins to take shape.

However, it is premature to confirm a bottom at this stage. What should be closely watched is whether US investor demand will recover. If support from mining costs and a revival of US money demand align, the scenario of breaking through resistance becomes more plausible. The on-chain data trends continue to be a critical focus.