MW Bitcoin's rally wasn't enough to push it past $100K this week. Here's what it needs to get out of this rut.

By Gordon Gottsegen

Bitcoin's surge this week may just be a 'bear-market rally'

Bitcoin is still down roughly 25% since its October high.

Bitcoin investors saw a glimmer of hope this week as the world's largest cryptocurrency jumped to nearly $98,000 on Wednesday. It was a sizable bump from the $90,000 level where bitcoin was trading a week ago, and the highest it has been in about two months.

This had investors wondering if the bear market was finally over and whether bitcoin was headed back above $100,000 next. However, crypto bulls may be getting ahead of themselves for now.

"Overall, I would still classify this rally as a 'bear-market rally,'" Julio Moreno, head of research at CryptoQuant, told MarketWatch.

What drove bitcoin higher this week - and why it didn't last

Bitcoin (BTCUSD) was trading around $90,000 last weekend, then gained some momentum over the following days. This was partially due to developments on the institutional and policy side.

First, bitcoin treasury company Strategy Inc. (MSTR) revealed that it spent over $1.2 billion to acquire 13,627 bitcoin. As one of the largest institutional holders of bitcoin, Strategy buying more of the crypto isn't exactly a surprise. The company has made six bitcoin purchases since the start of December. However, the most recent purchase was notable because it was the largest since July 2025.

Large institutional purchases like this one do draw some attention, and Strategy founder Michael Saylor's post about the purchase got almost 2 million views on X.

Meanwhile, the Senate Banking Committee was scheduled to vote on the Digital Asset Market Clarity Act of 2025 this week. The Clarity Act is part of President Donald Trump's push to make the U.S. the crypto capital of the world, and many crypto supporters believe that additional government policies can help crypto become more mainstream.

These two things helped boost demand for bitcoin this week. Moreno noted that demand conditions for bitcoin improved, and U.S. spot bitcoin indicators like the Coinbase Premium briefly turned positive after being deeply negative for most of December and January.

The Coinbase Premium Index measures demand for bitcoin.

Demand for bitcoin exchange-traded funds also grew, but Moreno pointed out that this growth wasn't unusual.

"Institutional demand is positive as seen in ETF purchases growing so far this year, but this growth is not extraordinary, as it is very similar to the same period in 2025," Moreno said.

The price of bitcoin peaked around $97,900 on Wednesday. Shortly thereafter, Coinbase (COIN) CEO Brian Armstrong revealed that he did not support the current draft of the Clarity Act. That took some of the wind out of bitcoin's sails, and it dipped below $96,000.

During that time, a few negative technical indicators were flashing, Moreno said. Demand was shrinking, there was negative momentum in valuation metrics and stablecoin liquidity was contracting. CryptoQuant's Bull Score Index, which uses several metrics to measure enthusiasm for bitcoin, was at 20 out of 100, Moreno said, indicating extreme bear territory.

CryptoQuant's Bull Score Index measures sentiment for bitcoin based on several metrics.

So even as bitcoin rallied this week, both demand and sentiment surrounding bitcoin remained muted.

"The recent bitcoin price rebound fits the historical profile of a bear market rally, with bitcoin up 21% since Nov. 21 after a 19% drawdown that confirmed a bear market by breaking below the 365-day moving average - a pattern closely resembling the 2022 cycle, where rallies ultimately failed at the same level," CryptoQuant wrote in its weekly report.

What it will take for bitcoin to break out of this rut

Moreno said he is watching to see if bitcoin crosses its 365-day moving average, which would indicate that things are turning around for the crypto. Today, that 365-day moving average level is $101,448, which bitcoin is currently trading moderately below.

However, while bitcoin's moving average sits above $101,000, the $100,000 level may also have some importance.

"From both a technical and psychological perspective, the $100,000 level is highly significant," Antonio Di Giacomo, a senior market analyst at XS.com, told MarketWatch.

"This is not only a technical resistance but also a symbolic milestone that attracts media attention, increases liquidity and can trigger FOMO-type behavior," he said, referring to the fear of missing out. "A clean break above $100K followed by consolidation would likely reinforce market confidence and strengthen the bullish narrative."

Big round numbers may be important, especially to retail investors, who are more prone to making decisions based on human psychology. But this week's rally was driven by institutions, Di Giacomo said. Bitcoin will need both retail and institutional investors on board in order to push back toward its October highs.

"This contrast matters because institutional flows can ignite the move, but sustained and accelerated rallies typically require broader retail engagement to push prices decisively back toward or beyond previous highs," Di Giacomo said. "If retail participation begins to recover more clearly ... the probability that this rebound evolves into a more durable trend increases meaningfully."

But even though bitcoin is not quite out of its bear market yet, the recent rally may indicate that the crypto has recovered from the worst of its lows.

"Key levels to watch include $94K support and $100K potential resistance. Recent price action has been bullish, potentially suggesting it has carved out at least near-term bottom," StoneX market analyst Fawad Razaqzada told MarketWatch.

-Gordon Gottsegen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 16, 2026 12:13 ET (17:13 GMT)

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