Bitcoin Market Risk Stays High Despite Recent Drop – Correction Or Warning Sign?

Bitcoin is facing a critical test as global markets remain volatile and macroeconomic tensions escalate. After weeks of price swings and uncertainty, BTC is trading above the $85,000 level — a psychological and technical threshold that bulls have managed to defend. Momentum appears to be building, but the real test lies ahead: reclaiming the $90,000 mark to confirm a recovery and shift broader sentiment.

Despite the recent bounce, the market environment remains fragile. CryptoQuant insights reveal that market risk is still elevated, even as Bitcoin’s price attempts to stabilize. According to their latest data, only 24% of the circulating supply is currently in an unrealized loss — a relatively low figure when compared to previous major corrections. Historically, such a level is often associated with early-stage pullbacks rather than full-scale capitulation.

This suggests that while bulls are stepping in, the broader market hasn’t fully flushed out excess risk, leaving room for additional downside if sentiment turns again. As the geopolitical climate remains tense and the macroeconomic outlook uncertain, Bitcoin’s next move will be crucial in determining whether this is the start of a sustained recovery or simply a temporary relief rally within a larger correction.

Bitcoin Price Steadies But Market Risk Remains Elevated

Global tensions and macroeconomic uncertainty continue to drive Bitcoin price behavior, with recent action hinting at a potential shift in momentum. As inflation begins to trend lower and the U.S. stock market shows signs of fragility, many analysts expect the Federal Reserve may eventually be forced to lower interest rates to prevent a deeper economic crisis. However, with trade negotiations between the U.S. and China evolving quickly, the timeline for any monetary easing remains unclear.

Despite Bitcoin’s recent bounce above $85,000, on-chain data from CryptoQuant highlights that market risk is far from resolved. While BTC has undergone a notable correction—dropping over 30% from its all-time highs—only 24% of the circulating supply is currently in an unrealized loss. This is historically a low level, often seen during early-stage corrections, not during deep capitulation phases.

The unrealized loss component is currently concentrated within the historical bottom zone, meaning that long-term holders are the ones absorbing the downside. This pattern typically reflects resilience but also signals caution: such phases tend to precede extended periods of sideways consolidation or further volatility rather than an immediate rally.

In summary, while bullish momentum is building, the market remains vulnerable. A sustained move higher will likely require improved macro clarity and confirmation of policy shifts before Bitcoin can fully break into a renewed uptrend.

Technical Details: Price Holds Above Key Indicators

Bitcoin is currently trading at $85,500 after successfully pushing above the 4-hour 200 MA and EMA, both positioned around the $84,000 level. This technical breakout is a positive sign for bulls, who now need to maintain price action above these indicators to confirm a shift in short-term momentum and initiate a broader recovery phase.

Holding above the $84K zone is crucial, as it signals strength and buyer commitment at this level. If bulls can continue to defend this range and reclaim the psychological $90,000 level, Bitcoin could quickly move into higher supply zones, potentially targeting a new local high and breaking the current consolidation pattern.

However, despite this positive momentum, risks remain. If BTC fails to maintain support above the $84K zone and dips below $81,000, it could trigger renewed selling pressure. Such a breakdown would likely result in a sharp drop toward the $75,000 support region, a level closely watched by analysts for its historical significance.

For now, Bitcoin’s price structure remains cautiously optimistic. Sustained buying interest and favorable macro conditions will be required to support further gains and confirm the beginning of a lasting recovery.

Featured image from Dall-E, chart from TradingView