Bitcoin’s January rally comes to a halt, but liquidity signals could save it again

ambcryptoPublished on 2026-01-07Last updated on 2026-01-07

Abstract

Bitcoin's January rally paused after reaching a local high of $94.7k, with a slight retracement to $92.5k. Analysts had anticipated a possible pullback toward $80.6k due to liquidation levels above $94.5k and below $84k. Despite short-term downside risks, liquidity indicators remain constructive. Stablecoin inflows and a falling BTC price in December boosted buying power, with the ratio recovering in January suggesting capital deployment. Net capital flows turned weakly positive by early January, with realized profits slightly exceeding losses. The profit/loss ratio rose to 1.78, and declining BTC supply coupled with strong ETF inflows support potential gains in the coming weeks. Bitcoin is up 6% in January, though December's losses haven't been fully offset.

Bitcoin’s price [BTC] hit a local high of $94.7k on Monday, 05 January. In an earlier report, AMBCrypto highlighted why analysts thought that a retracement towards $80.6k was likely.

The presence of liquidation levels above the $94.5k local resistance and a cluster of liquidations below the local support at $84k held the answer to this expectation. Such a price drop may be playing out, though it might be too early to be certain.

After reaching Monday’s high, Bitcoin fell by 2.40%, with the crypto trading at $92.5k at press time. Despite the risk of a short-term price drop, however, there is compelling evidence that sidelined liquidity could step in and help in BTC’s recovery.

Bitcoin’s buying power and the net capital flow clues

In a post on CryptoQuant Insights, analyst Darkfost observed that the current Bitcoin/stablecoin data “remains highly constructive.” Fresh stablecoin inflows to the exchange, combined with the falling BTC price during the correction in December, saw the ratio fall lower.

It showed that there was high buying power in the market. The signal it gave at the time of writing was “especially compelling”. The ratio has jumped higher since the start of January, which could mark the early stages of capital deployment.

Analyst Axel Adler observed that overall capital flows remained negative from 26 December to 03 January. This meant realized losses outweighed realized profits, with peak pressure on 26 December.

By the end of the week, the capital flows had become weakly positive. Realized profits slightly outweighed the losses. Glassnode data confirmed the bullish shift in recent days.

Finally, the 7-day moving average of the Bitcoin profit/loss ratio had been below 1 for the better part of December, but it pivoted back above 1 – Reaching 1.78.

The fall in Bitcoin supply in circulation, alongside strong ETF inflows, supported the idea that Bitcoin could make further gains in the coming weeks.

Final Thoughts

  • Bitcoin is up 6% so far in January, with sidelined capital reflecting high buying power in the market.
  • Short-term capital flows have not compensated for the heavy losses made in December yet.

Related Questions

QWhat was the local high price of Bitcoin on Monday, 05 January, as mentioned in the article?

ABitcoin hit a local high of $94.7k on Monday, 05 January.

QAccording to the analyst Darkfost on CryptoQuant Insights, what does the current Bitcoin/stablecoin data indicate about the market?

AThe current Bitcoin/stablecoin data 'remains highly constructive,' showing there is high buying power in the market.

QWhat was the trend in overall capital flows from 26 December to 03 January, as observed by analyst Axel Adler?

AOverall capital flows remained negative from 26 December to 03 January, meaning realized losses outweighed realized profits.

QWhat does the pivot of the 7-day moving average of the Bitcoin profit/loss ratio above 1 signify?

AThe pivot back above 1, reaching 1.78, signifies a shift where realized profits began to slightly outweigh losses, indicating a bullish change.

QWhat two factors support the idea that Bitcoin could make further gains in the coming weeks?

AThe fall in Bitcoin supply in circulation, alongside strong ETF inflows, supports the idea that Bitcoin could make further gains.

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363 Total ViewsPublished 2025.05.13Updated 2025.05.13

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