Bitcoin needs ‘sharp bounce’ at $88K as S&P 500 echoes COVID-19 crash

Bitcoin (BTC) hovered under $95,000 on Jan. 11 after an eventful day delivered a “bearish overreaction.”

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Bitcoin, stocks hint at “overreaction” to US jobs data

Data from Cointelegraph Markets Pro and TradingView captured volatility up and down during the week’s final Wall Street trading session.

US employment data initially sent BTC/USD back toward $92,000 before a snap rebound saw a $2,000 hourly candle and new local highs. Subsequent consolidation then brought BTC price action back to a familiar short-term range.

As Cointelegraph reported, risk assets broadly suffered as markets priced out odds of more than one interest rate cut by the US Federal Reserve in 2025. The S&P 500 and Nasdaq Composite Index both ended Jan. 10 down around 1.5%.

In the aftermath of the reaction, however, some market observers suggested that the dust may settle in bulls’ favor.

“Markets freaking out on a very bullish employment reading,” Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, wrote in part of a post on X.

“Short-term it’s a bearish overreaction as less jobs = more leeway for rates to stay high. BUT strong jobs numbers like today actually means the bull run can likely go a lot longer than thought.”

Edwards noted that certain aspects of the snap drop even mimicked the landscape following the March 2020 COVID-19 cross-market crash.

“This was the best reading in 6 months and puts to bed a potential for a bottoming in unemployment for now. PLUS check out the insane intraday put-call ratio reading today, as high as the Covid crash lows,” he added alongside a chart of the S&P 500. 

“Another bounce soon?”

Other signs of shifting sentiment included bets on a rate cut at the Fed’s next meeting in late January. Per data from CME Group’s FedWatch Tool, those remained low at the time of writing at 6.4%, the figure still larger than the 2.7% seen the day prior.

“Unemployment was more positive than expected. However, the treasury markets & yields seem to be at a tipping point and the system is cracking,” crypto trader, analyst and entrepreneur Michaël van de Poppe continued in his own thoughts on X. 

“The yields can’t really go way higher & the initial response is already captured. Very likely we’ll see an upwards trending market starting in the next 10-15 days on Bitcoin and the altcoins.”

Bitcoin and crypto test critical support

Some voices saw the need for Bitcoin to put in a more convincing return to bullish performance to avoid a protracted downtrend.

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Related: Bitcoin speculators panic sell at $92K in ‘good time for accumulation’

Among them was popular X analytics account Bitcoindata21, which warned that a return to levels below $90,000 would be highly problematic.

“If bitcoin goes to 88k, and takes crypto markets lower 5-10%, then I would want to see a sharp recovery before the week closes,” it told followers.

An accompanying chart showed relative strength index (RSI) readings for the total crypto market cap on weekly timeframes, these described as being “right around trend channel support.”

A separate post noted similarities between the two major corrections for BTC/USD since current all-time highs of $108,000 appeared in mid-December.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.