Bitcoin holds near $86,500 after sharp selloff as recovery remains fragile

Bitcoin is trading close to the $86,500 level on Wednesday after bouncing back from a sharp selloff earlier in the week. While forced liquidations have eased and selective dip-buying has helped prices stabilize, market participants remain cautious. Analysts say the recovery lacks conviction, with Bitcoin struggling to reclaim the $88,500 to $89,000 resistance zone.

According to the CoinSwitch Markets Desk, Bitcoin rebounded around 3 percent from Monday’s lows as selling pressure faded near the $85,000 to $86,000 support range. However, the move appears more like a short-term relief rally than a clear shift in trend. For a stronger upside, analysts believe sustained spot buying will be needed. From a technical perspective, resistance remains near $88,000 to $88,500, while immediate support sits just below current levels.

Despite ongoing pressure, some signs point to resilience beneath the surface. Riya Sehgal, Research Analyst at Delta Exchange, noted that Bitcoin has held above $85,000 even as ETF outflows touched roughly $358 million. At the same time, on-chain data shows wallets holding between 100 and 1,000 BTC accumulated nearly 54,000 BTC this week. This marks the fastest accumulation rate in over a decade and suggests that long-term participants are stepping in, even as ETF investors remain cautious.

Bitcoin is now down nearly 31 percent from its October highs, but its behavior continues to reflect its role as a hedge during periods of macro uncertainty. Its volatility and changing correlation with assets like gold underline that the market is still adjusting to broader economic signals.

Technically, Bitcoin remains in a consolidation phase below $88,500. A decisive breakout above $89,350 could open the door toward the $90,000 to $91,200 range. On the downside, support lies between $86,500 and $85,000. Ethereum is also under pressure, facing resistance near $3,025 to $3,050, with support around $2,875 to $2,840. Both assets remain in corrective territory.

Macro factors continue to influence sentiment. Recent employment data showed strong hiring alongside higher-than-expected unemployment, creating mixed signals for markets. Still, Bitcoin exchange reserves are at record lows, which has helped limit downside moves. Investors are now closely watching upcoming US CPI data, which could shape expectations around potential Federal Reserve rate cuts.

Liquidity conditions remain tight, and broader risk appetite is muted. According to market observers, ETF participation alone has not been strong enough to push prices into a sustained breakout. Without renewed interest from larger buyers, Bitcoin may continue to trade in a narrow range and remain sensitive to macro developments.

Adding to the pressure, rising oil prices following the US announcement of restrictions on oil tanker movements linked to Venezuela have raised inflation concerns. If energy prices stay elevated, analysts expect a more cautious stance toward risk assets, including crypto.

Liquidations remain elevated, with over $500 million in crypto positions wiped out recently. Despite this, developments such as JP Morgan’s tokenized asset initiatives and ARK Investment’s crypto-linked equity exposure are seen as constructive signals for long-term adoption.

Looking ahead, faster approval timelines for crypto exchange-traded products by the US SEC could support market structure over the next few years. If momentum improves, analysts believe Bitcoin could attempt a move toward $90,000, with higher support levels gradually forming near the $86,000 zone.