Bitcoin correction phase, residual risks test market sentiment

In the cryptocurrency market, a major turning point is occurring between January and February. Bitcoin, which had shown resilience the previous month, has reversed course and as of February 1st, has deepened its correction to the $78,400 range, recording a 24-hour decline of 5.64%. This correction suggests that expectations for easing geopolitical tensions have waned, and residual risk factors in the market are becoming more apparent.

In mid-January, Bitcoin broke through $97,000, reflecting heightened risk appetite among investors. However, the current adjustment reflects a market reassessment of that optimistic outlook.

Easing Geopolitical Tensions and Reversal of Risk Appetite

In mid-last month, when President Donald Trump repeatedly made hawkish statements regarding Greenland sovereignty, markets expressed concerns about rising tensions among NATO allies. At the same time, Trump’s efforts to improve relations with Iran led to a decline of over 4.4% in WTI crude oil futures, pushing prices down to the $59 range.

This decline in the oil market indicates that market participants were evaluating a “partial” easing of geopolitical risks. However, the term “partial” is important. It was not a complete resolution of tensions but rather a temporary retreat amid ongoing risk factors, which underpins the current correction phase.

Regulatory Uncertainty Shakes the Cryptocurrency Market

A more direct concern for the crypto market is the opacity surrounding regulatory developments in the US. The US Senate Banking Committee postponed markup of the Crypto Asset Market Structure Bill, and Coinbase withdrew support for the bill. Meanwhile, Wall Street banking insiders continue lobbying efforts related to crypto earnings, leaving regulatory direction unclear.

This regulatory uncertainty is exerting short-term downward pressure on the crypto market. Ethereum has fallen 9.86% during the same period, outpacing Bitcoin’s decline. Privacy-focused tokens also continue to face selling pressure, with Zcash down 8.78% and Dash down 5.40% (as of February 1st), reflecting broad market weakness.

Technical Analysis: Next Key Milestones

From a technical perspective, Bitcoin’s weekly chart still shows a strong trend continuation pattern. After surpassing $90,000 last month, the focus now is on whether the price can establish a more solid support level following the correction.

The key point moving forward is whether the weekly close can remain above the 50-week exponential moving average. Holding this level would confirm a resumption of a bullish market. Conversely, failure to do so could lead to further downside pressure.

The next major resistance zone is at $100,000. This level is also significant in Fibonacci retracement terms, and a clear path to this level would depend on a recovery from the current correction phase.

Token Events and Mining Trends

On January 15th, Ravencoin (RVN) underwent its second block reward halving at block number 4,200,000, reducing mining rewards to 1,250 RVN per block. This difficulty adjustment could, in the medium to long term, slow the supply growth rate and positively impact the price.

In the same month, Starknet (STRK) released tokens worth $10.6 million, representing 4.83% of circulating supply, and MANTRA (OM) completed its migration to a new chain after the transition period. These token events influence market liquidity and structure.

Spot ETF Liquidity and Market Structure

The market’s resilience in mid-January was supported by a net inflow of $843 million into US Bitcoin spot ETFs. At the same time, Ethereum ETFs saw inflows of $175 million, reflecting institutional risk appetite.

However, these ETF flows are likely slowing down now, indicating a shift in market sentiment.

Overall Market Movement: Residual Risk Factors Materialize

Bitcoin dominance reached 59.7% last month but has held around 60% during the current correction, indicating that the entire crypto market is adjusting in the same direction.

The US stock market is also correcting, with the S&P 500 turning downward after an early-month rally. This is not just a technical correction but a reassessment of residual risk factors such as geopolitical uncertainty, regulatory ambiguity, and inflation management challenges.

The crypto market is expected to continue being influenced by these macro factors. For market participants, monitoring regulatory developments and geopolitical risks is more critical than short-term price fluctuations.