Bitcoin hovers near $87,800 after a sharp drop, sparking debate among analysts about a short-term bounce or a deeper decline. The asset fell more than 5% over the past week and slipped almost 1% in the last 24 hours, prompting traders to watch key technical levels and on-chain signals.
At a Glance
- Bitcoin near $87,800 after a 5% weekly decline.
- Analysts see a potential ABC correction and a bear flag.
- On-chain metrics show falling NUPL and negative Delta Growth Rate.
- Macro pressures include a possible U.S. shutdown and Fed rate decision.
Technical Analysis
Junkie, a crypto analyst, claims Bitcoin has completed a five-wave bearish pattern according to Elliott Wave Theory, which often signals the end of a move. He sees a short-term bounce before any further decline.
The chart shows a potential ABC correction forming, with a rise (A), a dip (B), and another push up (C). If the pattern completes, Bitcoin could retest a trendline from previous lows and possibly reach the $91,000 to $92,000 range.
“We may have a bit further down to go ($84k) until 5 waves finishes but if we haven’t reversed already, we will,” said Junkie.
On January 25, 2026, The Maverick of Wall Street posted that a bear flag is forming on the weekly chart, indicating a possible drop to $60,000. The flag aligns with a 31% decline from the recent range.
On-Chain Metrics
Data from Alphractal shows Bitcoin’s NUPL (Net Unrealized Profit/Loss) is falling but still above zero, a condition that historically precedes cycle bottoms only after turning negative.
- NUPL is declining but remains positive.
- Delta Growth Rate has turned negative, signaling slowed speculative buying.
- CryptoQuant reports more holders are now selling at a loss, the first time in over two years that profit margins have dropped this much.
Macro Context
Bitcoin’s drop below $88,000 coincided with mounting macro pressures, including a potential U.S. government shutdown and the Federal Reserve’s upcoming rate decision. These factors have made investors more cautious.
Key support levels sit at the 50-week SMA near $101,000 and the 200-week SMA around $57,800. A break below the 50-week line could open the way for lower prices, while a bounce might retest previous highs.
Historical Patterns
Bitcoin has exhibited similar patterns in the past. A five-wave bearish sequence often precedes a correction, while an ABC structure can signal a temporary rebound.
5-Wave Pattern
The five-wave pattern, as described by Elliott Wave Theory, typically consists of three impulsive waves followed by two corrective waves. Completion of the fifth wave often triggers a pullback.
ABC Correction
An ABC correction comprises a rise (A), a dip (B), and a final push up (C). Successful ABC formations can lead to a brief rally before a new trend emerges.
Bear Flag
A bear flag appears after a sharp decline, forming a small upward channel that is usually followed by another drop. The flag’s breakdown can confirm a continuation of the downtrend.
Key Levels
| Level | Value | Significance |
|---|---|---|
| 50-week SMA | $101,000 | Major support; break below may signal deeper decline |
| 200-week SMA | $57,800 | Long-term support; potential floor |
| ABC C Target | $91,000-$92,000 | Possible short-term rally range |
| Bear Flag Bottom | $60,000 | Potential lower bound if flag breaks |
Timeline
| Date | Event |
|---|---|
| Jan 25, 2026 | Bear flag tweet by The Maverick of Wall Street |
| Jan 24, 2026 | Bitcoin falls below $88,000 |
| Jan 20, 2026 | NUPL turns negative (historical bottom marker) |
| Jan 15, 2026 | Fed rate decision scheduled |
| Jan 10, 2026 | Potential U.S. shutdown announcement |
Key Takeaways
- Bitcoin near $87,800 after a 5% weekly decline.
- Technical analysis points to a potential ABC correction and bear flag.
- On-chain indicators show falling NUPL and negative Delta Growth Rate.
- Macro pressures and key SMA levels could dictate the next move.
Investor Sentiment
Market participants are monitoring short-term price action closely, with many traders positioning for a rebound or a further decline.
Risk Factors
- Potential U.S. government shutdown.
- Federal Reserve rate hikes.
- Break below 50-week SMA.
Potential Scenarios
- Short-term bounce to $91,000-$92,000.
- Continuation of downtrend to $60,000.
- Stabilization near 200-week SMA.
Data Sources
- Alphractal for NUPL and Delta Growth Rate.
- CryptoQuant for holder activity.
- Twitter for real-time analyst commentary.
Market Reaction
Price volatility increased after the bear flag tweet, with liquidity pools experiencing higher withdrawal rates.
Analyst Consensus
While some analysts favor a bounce, others caution that macro risks could outweigh technical signals.
Final Note
Bitcoin’s next move will hinge on the interplay between technical patterns, on-chain weakness, and macroeconomic developments.
