Bitcoin’s spike above $94,000 on January 6 quickly reversed to $91,500, wiping out more than 2% and triggering a $96.5 million long-term liquidation as the cryptocurrency’s market cap fell by $70 billion. Skeptics characterized the initial surge as a “dead cat rally,” but indicators of $1.1 billion in institutional investor inflows into spot exchange traded funds and strong accumulation suggest resilience.
Bitcoin’s volatile correction sparks ‘dead cat’ fears
Digital asset markets faced a harsh reality check on January 6 as Bitcoin underwent a volatile correction. Just hours after breaking through a one-month peak and breaking through the $94,000 level, the premier cryptocurrency fell to a session low of $91,500.
The turnaround was quick. After peaking at around $94,800 on Monday, Bitcoin has fallen more than 2% of its value. The sudden pullback has reignited skepticism among analysts, with many concerned that the recent rally lacks the underlying support for a true breakout, instead characterizing it as a classic “dead cat bounce.” The downward pressure on Bitcoin acted as a gravity well for the broader ecosystem. The market capitalization of cryptocurrencies has significantly declined in value, falling from an intraday peak of $3.3 trillion to $3.23 trillion by 1:45 p.m. ET.
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This effect was especially painful for leveraged traders. According to Coinglass’ 4-hour liquidation heatmap, this withdrawal caught committed bulls by surprise and caused a forced liquidation of $96.5 million of long positions. This wave of liquidations likely accelerated the price decline, lending credence to the dead cat bounce story.
Institutional support vs. “lazy analysis”
However, some experts have pushed back against this theory, labeling it as “lazy analysis”, pointing out that over $1.1 billion has flowed into spot bitcoin exchange traded funds (ETFs) in the first two business days of 2026. Analysts suggest this indicates new allocations were made through regulated channels rather than short-term speculative activity.
Jonathan Lundin, senior market analyst at PrimeXBT, agreed that it is too early to draw any bearish conclusions. Lundin pointed to indicators that suggest steady accumulation.
“The Expended Output Margin is hovering just around 1.0, which indicates that the coin is being replaced around the break-even point. No one is panic selling at a loss,” Lundin said. “About 72% of the supply is considered illiquid and is held by companies that simply don’t spend. And we’re still seeing coins moving from exchanges to cold storage. That’s what accumulation looks like.”
Lundin believes the $95,000 level is an important threshold. Once this point is exceeded, the run toward $100,000 may begin.
Psychological warfare for $100,000
Saeed Al Fahim, founder and CEO of Sarwa, echoed this sentiment. He described the rally to $100,000 not as speculation, but as “Bitcoin reasserting itself beyond its long-term equilibrium range.” Al Fahim added that a return to six digits in the first quarter is “very likely” unless geopolitical events intervene.
“The most important thing is that Bitcoin is once again behaving like a macro asset, rather than a reflexive risk trade,” Al Fahim said. “The resistance we saw in December was likely a result of year-end tax collections and portfolio rebalancing. Now that the calendar has turned, $100,000 is within sight and could be breached within weeks rather than months.”
Meanwhile, Lamp Network CEO Przemek Kowalczyk warned against relying too much on short-term price levels, characterizing them as “easy reference points” that offer little insight on their own. Instead, Kowalczyk argued that a system’s durability is the true indicator of success.
“What’s more important is whether the system itself is holding up, whether liquidity is available when needed, payments continue to be made without friction, and capital can move efficiently even when sentiment is weak,” Kowalczyk said.
When those fundamentals remain intact, prices tend to rise over time, Kowalczyk said. He noted that market sentiment often lags reality regarding whether the 2026 rally is due to “new year” capital inflows or a short squeeze.
“In reality, more persistent movements typically begin when risk is mispriced relative to the underlying conditions,” Kowalczyk said. “When pessimism becomes the default view, the more important question is not who is long or short, but whether something in the system has actually changed.”
As of 4pm ET on Tuesday, the price of Bitcoin is now at $92,475 following a sharp decline.
Frequently asked questions 💡
- What was the trigger for Bitcoin’s fall on January 6th? A quick correction saw the price fall from $94,800 to $91,500, a drop of more than 2% in a matter of hours.
- How did the broader crypto market react? Market capitalization decreased from $3.3 trillion to $3.23 trillion, with leveraged traders facing $96.5 million in liquidations.
- Will institutional demand still support Bitcoin? Yes, spot ETFs absorbed $1.1 billion in inflows, indicating regulated accumulation beyond short-term speculation.
- Could Bitcoin still reach $100,000 soon? Analysts say if it breaks above $95,000, it could reach six digits in the first quarter of 2026.
