Bitcoin’s Relief Rally Lifts Spirits: Is it Time to Buy the Dip?
The crypto market shows signs of recovery following a significant sell-off. Bitcoin's price rebounded from $99,600 to $103,400, with debates on whether this marks a sustainable rebound or a temporary recovery. On-chain analyst Willy Woo predicts potential confirmation in two weeks, while Bitcoin has already dropped 25% from its October peak. Historical data suggests that supply losses often precede price increases, yet analysts warn the current rebound lacks long-term conviction, relying on short-term technical factors. For sustained recovery, consistent on-chain accumulation and stability are required. Analysts expect Bitcoin's accumulation range around $100,000 with possible mid-term recovery into 2026. Meanwhile, bearish projections suggest further downturns between $93,000 to $88,000. Macro factors, like an end to the government shutdown, could influence outcomes, as tempered expectations lower Bitcoin's year-end target from $185,000 to $120,000.
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Introduction: Signs of Recovery in the Crypto Market
The crypto market is showing tentative signs of recovery following a bruising sell-off, leaving traders grappling with a critical question: Is this rebound sustainable?
According to CoinGecko data, Bitcoin saw an upward swing, bouncing from Wednesday’s intraday low of $99,600 to trade around $103,400. This recent movement has sparked speculation about whether it signals the start of a sustainable rally or merely offers a temporary respite before further declines.
On-Chain Analysis and Historical Patterns
On-chain analyst Willy Woo shared some optimism on Twitter, stating, “Liquidity behind Bitcoin is starting to make a recovery,” and suggested that a price confirmation could follow in two weeks.
Bitcoin has shed approximately 25% from its October peak, pushing the supply of coins held at a loss to 28.1%, according to CryptoQuant data. Historical trends reveal that such levels have often preceded price reversals; for instance:
- A spike to 27% in April 2025 preceded a 70% rally in Bitcoin.
- In September 2024, a similar occurrence triggered a 125% surge.
These historical patterns provide hope, but analysts caution against drawing definitive conclusions too early.
Skepticism Around the Recent Bounce
Despite the recent upswing, some experts urge caution. Shawn Young, Chief Analyst at MEXC Research, pointed out that this recovery is largely technically driven, supported by spot inflows and leveraged short-covering, rather than a resurgence of long-term conviction.
Young emphasized that the market needs:
- Consistent on-chain accumulation by long-term holders.
- Stabilized funding rates to signal an enduring bottom.
He added, “The recent relief bounce could come across as active dip-buying, but it is not yet eligible to be considered a full-scale recovery signal.”
Key Levels for Bulls and Bears
Jiehan Chen, Operations Onboarding Lead Analyst at Schroders, identified the $100,000 zone as a potential accumulation range, which could fuel a mid-term recovery into 2026. He stressed that for bulls, the weekly candlestick close needs to remain above $103,000.
Conversely, experts warn that the uptick could simply be a bear market bounce within a cooling cycle. The dip-buying zone might extend as low as $93,000 to $88,000, should the downtrend persist.
Adjusted Expectations and the Macro Backdrop
The recent sell-off has also led to revised projections. Alex Thorn, head of research at Galaxy Digital, adjusted his end-of-year target for Bitcoin from $185,000 to $120,000, reflecting tempered expectations.
Still, the macro backdrop remains a potential game-changer. Chen highlighted that a positive catalyst, such as an end to the government shutdown, could significantly alter the economic outlook and provide the necessary boost for sustained recovery.