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Bitcoin—BTC, bounced back to $95,500 on Tuesday after falling below $90,000 the day before. The dramatic drop caused over $734 million in liquidations, shaking the confidence of many traders. A bullish hammer on the chart signals potential recovery, but the risk of further volatility remains.
What Does the Bullish Hammer Reveal?
The bullish hammer suggests that buyers are stepping in. Bitcoin dropped to $89,256 during the recent sell-off but managed to recover and close above $94,500. This recovery highlights strength after significant pressure. However, the price correction caused over $152 million in Bitcoin liquidations, reminding traders of the dangers of high leverage during uncertain times.
Institutional activity shows a less optimistic picture. Bitcoin Exchange Traded Funds experienced $284.10 million in outflows on Monday. Outflows have continued steadily since January 8, signaling reduced confidence among institutional investors. If this trend intensifies, Bitcoin could face additional selling pressure, potentially testing key support levels.
Patience Matters in This Market
Optimism about pro-crypto regulation under the incoming administration provides a glimmer of hope for the future. However, short-term risks remain high. Upcoming economic news could cause sudden price swings, leaving impatient traders exposed to losses.
Waiting for the daily candle to close can provide clearer signals. A confirmed bullish hammer increases the chance of a sustainable recovery and helps traders avoid traps set by manipulation. Rushing into the market without confirmation often leads to unnecessary losses.
The bullish hammer presents an opportunity, but patience is crucial in these uncertain conditions. Monitor the charts closely, focus on confirmed signals, and avoid impulsive decisions. Bitcoin remains strong in the long term, but careful planning is essential to navigate the short-term risks.
