Risk aversion psychology and Wyckoff pattern: February's turning point in the Bitcoin market

After the year-end and early-year plunge, the cryptocurrency market is sending interesting signals in early February. Currently, Bitcoin (BTC) is trading around $78.61K, with a 24-hour decline of 5.55%. What stands out during this correction is not just the price drop, but the signals the market is showing from a technical pattern perspective. In particular, interpreting the current market structure through Wyckoff pattern analysis suggests that this is not merely a bearish phase but a potential reversal signal.

Market Psychological Shift Driven by Dollar Weakness and Gold Rally

The global financial markets are restructuring with a clear risk-off sentiment. The US dollar index (DXY) has fallen approximately 0.39% to around 97.90, approaching its lowest level since early October. More notably, even in this environment of a weak dollar, traditional safe-haven assets are experiencing inflows. Gold futures are trading up 1.04% at $4,516, and silver futures are also up 1.66%.

Senior market analyst at FxPro diagnosed this phenomenon as a “fundamental change in risk attitude.” Despite the dollar’s weakness, risk assets like Bitcoin are showing weakness, while tangible assets like gold are strengthening. This paradoxical movement reflects a shift in investor psychology. The global bond sell-off also supports this trend.

Wyckoff Spring Action as a Signal of Selling Fatigue in Solana

From a technical analysis perspective, the most intriguing signal is emerging in Solana (SOL). Solana is currently trading at $105.38, having broken out of a recent sideways consolidation pattern and then declined before rebounding the next day. This clearly demonstrates the characteristics of classic Wyckoff Spring Action.

In Wyckoff patterns, spring action serves to trap sellers (bears) in false positions. It induces weak hands to stop-loss during a downtrend, then as the price rebounds, it reveals strong institutional demand. Historically, this has been the first signal of a trend reversal to the upside. However, a confirmed bullish reversal requires a breakout above the upper boundary of the previous channel.

Bitcoin and Ethereum Correction: Correlation with GDP Data

Bitcoin is in a correction phase along with Ethereum (ETH) at $2.41K. The CoinDesk 20 index has fallen 0.3% to 2,717.75, with a 24-hour decline of 2.16%. Ethereum’s weakness is more pronounced, with an 8.82% drop over the past 24 hours.

This correction is influenced by US economic data. The US Bureau of Economic Analysis (BEA) released an advance estimate of Q3 GDP, which was expected to grow at 3.2%. Although this is a slowdown from the previous quarter’s 3.8%, it still exceeds the pre-pandemic average of 2.6% since late 2021, indicating solid growth.

Bitcoin’s inability to sustain above the $90,000 resistance reflects weakening macroeconomic sentiment. Weaker-than-expected economic data may trigger short-term buying interest in BTC, but currently, risk-off sentiment remains dominant.

DAO Governance and Token Events: Weekly Highlights

In the DeFi ecosystem, several major governance votes are underway. Yearn DAO has been voting on multi-signature keyholder replacements and a plan to restore yETH, while GMX DAO is conducting a vote to allocate funds for Solana distribution. Aave DAO is moving toward strengthening its autonomy through a vote to regain full ownership of its brand assets.

These governance activities demonstrate that the DeFi ecosystem is still evolving. The impact of each DAO’s policy decisions on token prices is increasing, and investors are assessing the future direction of projects based on governance outcomes.

Signals from On-Chain BTC/ETH ETF Fund Flows

The daily net outflow from spot Bitcoin ETFs is $142.2 million, with a total net inflow of $57.25 billion. The total Bitcoin holdings are approximately 1.31 million coins. Conversely, Ethereum spot ETFs recorded a daily net inflow of $84.6 million, with a cumulative net inflow of $12.55 billion.

The daily outflow of BTC suggests short-term bearishness, but the overall net inflow indicates ongoing institutional demand. Continuous net inflows into ETH imply sustained institutional interest. These fund flows can be interpreted as long-term investors viewing price corrections as buying opportunities.

Market Signals: Reinterpreting Wyckoff Patterns

In summary, the current crypto market shows interesting developments from a Wyckoff pattern perspective. Technical signals like Solana’s spring action, persistent institutional inflows, and signs of selling fatigue all point toward a potential reversal. However, reversing the current global risk-off sentiment requires improved economic data or clear technical breakouts.

Whether Bitcoin can again break above $90,000 and whether a strong rebound as predicted by Wyckoff patterns will materialize are key points to watch in February.