Headline: Bullish momentum — or a classic bull trap? What on-chain data says about Bitcoin’s next move
Bitcoin opened 2026 with a burst of momentum, sparking debate across markets: is this the start of a sustained rally or a short-lived bull trap? Between fresh ETF flows and renewed whale activity, many market participants are calling the move “coordinated accumulation.” The price action and derivatives flows certainly look bullish — but on-chain signals paint a more nuanced picture.
Price and derivatives: momentum is real
- BTC kicked off the year with a 2.8% gain, reclaiming the $90,000 level after roughly six weeks of consolidation (TradingView, BTC/USDT). That reclaim fuels the narrative that a market bottom may already be in.
- Derivatives flows are backing the move: Lookonchain highlighted a trader who went fully long with 20x leverage at about $87k and is now sitting on roughly 55% unrealized gains.
- On January 2, around $326 million in short positions were liquidated — the largest daily short squeeze in about a month — coinciding with BTC’s push above $90k.
Why analysts are cautious
Despite the visible bullish momentum, AMBCrypto warns the key question is whether this is "smart positioning" or blind optimism that could collapse into a bull trap. Several indicators suggest caution:
- Sentiment and funding: The Fear & Greed Index rose seven points and is close to exiting the “fear” zone. Funding rates have flipped positive, indicating traders are increasingly long — a sign of optimism that can amplify corrections if sentiment turns.
- Whale balances: CryptoQuant data shows a decline in whale balances once exchange addresses are removed. Addresses holding 100–1,000 BTC (a cohort that includes ETF-related wallets) are showing similar downward trends, which undermines the “coordinated accumulation” interpretation.
- ETF support still muted: Bitcoin ETFs’ assets under management have dropped to about $67.6 billion, near the lowest level since June 2025. That suggests ETF demand hasn’t yet provided rock-solid bid support.
What to watch next
- Funding rates and liquidations: Continued positive funding and frequent short squeezes can keep the rally alive, but they also increase vulnerability to sharp pullbacks.
- Whale and ETF flows (off-exchange): If whale balances and large-holder cohorts turn back up — especially outside exchanges — it would reinforce a durable bid beneath BTC.
- Sentiment readings: Watch the Fear & Greed Index and on-chain signs of retail participation. A sudden reversal in these metrics could flip this move into a bull trap.
Bottom line
The opening weeks of 2026 show clear bullish forces at work — price gains, liquidation-driven squeezes, and leveraged longs profiting — yet underlying on-chain trends and lagging ETF AUM point to a disconnect between market positioning and real capital commitments. That mismatch is what makes the current rally look exposed: it could be the start of a broader recovery, or it could stall and reverse if whales and institutional flows don’t follow through.
Disclaimer: AMBCrypto's content is informational and not investment advice. Trading cryptocurrencies carries high risk; readers should do their own research before making investment decisions. © 2026 AMBCrypto
Read more AI-generated news on: undefined/news
