Bitcoin under pressure in tight trading range: Crypto market shows signs of recovery despite global risk flight

While crypto markets are suffering from ongoing risk aversion, Bitcoin is consolidating within a tight trading range that has been going on since November. After a drastic sell-off on Tuesday that pushed the largest cryptocurrency as low as $87,760, BTC has now stabilized at around $84,400, with extreme volatility wiping out numerous long positions. The technical resistance and the current trading range become the barometer for the next market movement.

Trading range stabilizes as global markets become turbulent

Bitcoin’s narrow trading range reflects broader uncertainty in traditional financial markets. Since Sunday’s open, Nasdaq 100 and S&P 500 futures are down about 2 percent each, with Wall Street posting its biggest one-day loss since October. These risk sell-offs were triggered by escalated trade tensions between the US and the European Union – triggered by President Donald Trump’s tariff threats on Greenland’s property and European countermeasures.

Paradoxically, traditional safe havens are benefiting from this uncertainty, with gold and silver reaching new record highs as investors shift their holdings to crisis-tested assets. The low liquidity in the crypto markets amplifies these selling pressures, which has led to a cascade of liquidations that illustrates the extent of the market weakness.

Derivatives positions under extreme volatility: liquidations and volatility jumps

Volatility in the crypto market has reached a level that is driving traders to the options market. Bitcoin’s 30-day implied volatility (IV) jumped to 44.34 on Tuesday — the highest since Jan. 10 — as market players stepped up hedging their positions. This increase is directly correlated with liquidations: $324 million in long positions were wiped out, while the subsequent rebound wiped out about $34 million in short positions.

Open interest in Bitcoin fell 3.25 percent to $28.3 billion in the last 24 hours — a notable drop from about $300 million at 05:00 UTC that coincided with a temporary Bitcoin surge to $90,000. This indicates profit-taking on short positions, a signal of potential counter-movements.

A hopeful sign for longer-term traders: Global funding rates remained consistently positive throughout the sell-off. This suggests that despite the falling prices, a fundamentally bullish bias persists among perpetual futures investors – a possible indicator of lower-level purchasing power.

Altcoins show divergence: From massive losses to surprising gains

The altcoin market suffered significant losses, with $500 million in futures liquidations in the last 24 hours underscoring weakness. Monero (XMR) led the decline with a 13.6 percent plunge, with losses adding up to 37.25 percent since the record high on Jan. 14. Ethereum (ETH) fell 4.5 percent, showing relative weakness compared to other major cryptocurrencies such as Solana (SOL) and Ripple (XRP), both of which lost about 1.25 percent.

The resilience of Axie Infinity (AXS) is particularly noteworthy: the blockchain gaming token bucked the downward trend and rose by over 16 percent, with a daily trading volume of $2.1 billion marking its highest level since September. AXS has gained a total of 165 percent in value since Jan. 13, showing relative strength within the metaverse sector, while the CoinDesk Metaverse Select Index (MTVS) is the best-performing benchmark this year, up 43.9 percent year-to-date.

Another rising star is World Liberty Financial (WLFI), the DeFi token with ties to the Trump family. Since midnight UTC, WLFI is up 6.6 percent, helped by increased activity around the platform’s stablecoin USD1, which has seen its circulation increase from $2.7 billion to $3.4 billion since Dec. 24.

The CoinMarketCap altcoin season metric remains at 26/100, signaling a bearish environment for altcoins compared to Bitcoin – however, several tokens are now in oversold territory, which could allow for a recovery rally in the coming days. Zcash (ZEC) shows an interesting pattern, with open interest falling 2.5 percent while price rising 1.5 percent, indicating that short traders have been reducing their bearish positions since Jan. 8.

Support levels in focus: Technical analysis for the upcoming phase

Ripple (XRP) demonstrates the importance of technical levels in the current market constellation. The token fell from $1.91 to about $1.80 — a decline of around 5 percent — as broader risk aversion put pressure on highly volatile assets. The acceleration of the decline came as XRP broke the crucial support level of about $1.87 with high volume, wiping out the previous week’s gains.

Buyers entered the $1.78 to $1.80 zone, establishing a new support level that traders are now watching closely. A sustained rise back above $1.87 to $1.90 would signal a corrective countermove, while a break below $1.80 could signal the start of a deeper decline.

Pudgy Penguins, meanwhile, shows an alternative success strategy in the NFT space. The project has evolved from speculative “digital luxury goods” to a multi-dimensional consumer IP platform, with over $13 million in retail sales, over a million units sold, and a more widely distributed PENGU token base (over 6 million wallets). The game title Pudgy Party already exceeded 500,000 downloads in two weeks. While the market could value Pudgy at a premium to traditional IP, continued success depends on implementation in the areas of retail expansion, gaming adoption, and deeper token usability.

Outlook: Market consolidation and possible turning points

Bitcoin’s narrow trading range, which has dominated since November, could turn into a turning point. Positive funding rates indicate stubborn purchasing power, while oversold conditions in several altcoins indicate a technical countermovement. Global market developments – especially escalation or easing of US-EU trade tensions – are likely to be the next big catalyst for Bitcoin and the broader crypto market as traders wait for breakouts above the existing trading range.