The cryptocurrency market reacted to the escalating conflict between the Federal Reserve and the U.S. Department of Justice. Analysts noted Bitcoin's attempts to hold above $92,000 and evaluated the likelihood of a trend reversal.
Failed Hedging
Experts at QCP Capital highlighted the rally in gold and silver during the Asian trading session.
This movement coincided with comments from Federal Reserve Chair Jerome Powell. He stated that the U.S. Department of Justice threatened to prosecute him over testimony given before Congress in June 2025, interpreting such actions as political retaliation for the Fed's refusal to align interest rates with President Donald Trump's agenda.
Investors perceived this as a risk to the central bank's independence and began reallocating capital into alternative savings. Initially, Bitcoin supported this momentum, attempting to act as a hedge against institutional threats.
However, the digital currency could not maintain its position above $92,000 and corrected at the start of European trading.
“The inability to capitalize on bullish narratives highlights the structural obstacles Bitcoin faces since October 10. Optimism for a breakout in the first quarter is fading,” QCP noted.
Analysts also observed profit-taking and shifting expectations in the options market:
- Traders reduced positions in long-term call options (strikes of $98,000 and $100,000 expiring in January-February 2026);
- Some January contracts ($100,000) were moved to March 2026 with an increased strike to $125,000.
This indicates that investors are postponing bullish expectations, doubting a quick rally, analysts emphasized.
QCP warned of continued volatility this week. Markets are awaiting the release of U.S. inflation data on January 13, followed by a U.S. Supreme Court decision on tariffs the next day.
Signal of Reversal
CryptoQuant analyst CryptoMe noted an attempt by the SOPR metric for short-term holders (STH-SOPR) to establish itself above a key level, which may indicate a shift from a bearish to a bullish trend.
A New Hope: Trend Reversal… or Just a Fakeout?
— CryptoQuant.com (@cryptoquant_com) January 12, 2026
“In our current situation, after October 10, STH-SOPR tried for the first time this week to escape upward above 1.0.” – By @cryptometugce pic.twitter.com/Tq2IYw9Dxk
STH-SOPR measures the profitability of coins that have moved on the network in the last 155 days. A value below 1 indicates that speculators are selling the asset at a loss.
According to the expert, since October 10, the metric has been in negative territory. Historically, the level of 1 serves as significant resistance during downturns and support during uptrends.
“If you look closely at the chart, the level of 1 acts as a ceiling in bear cycles: STH-SOPR cannot rise above it. In bull periods, it serves as a floor. Exiting the zone below one is often used as a trend reversal signal,” the analyst explained.
This week, the metric attempted to break through this resistance from below for the first time in three months. However, CryptoMe emphasized that the signal has not yet been confirmed.
There is a risk of a "false breakout" if the metric cannot hold above the threshold by the end of the day. The expert believes that the mere attempt to breach this level after prolonged stagnation offers hope for market recovery.
Retail Investor Fear
Despite the overall upward trend of Bitcoin, retail investors continue to offload assets at a loss due to volatility fears, noted another CryptoQuant expert under the pseudonym G a a h.
Retail Investors Fear Short-Term Volatility as Bitcoin Continues Its Upward Trend
— CryptoQuant.com (@cryptoquant_com) January 12, 2026
“Historically, this misalignment between rising prices and capitulating retail investors often marks areas of opportunity.” – By @gaah_im pic.twitter.com/2RcmrttcbK
According to the analyst, during 2024-2025, the price of the leading cryptocurrency structurally rose, setting new local highs. However, the behavior of speculators contradicted this trend.
By the end of last year, sentiment approached the "extreme fear" zone. The SOPR value dropped to 0.98, a level last seen in November 2022 when Bitcoin prices hovered around $16,000.
G a a h highlighted several key trends:
- For the last 70 days, short-term investors have been realizing losses;
- After breaking the previous historical high, profit-taking among STH has entered a downward trend;
- The SOPR-STH remaining below 1 signals prolonged corrections.
During such periods, unrealized losses become realized, increasing selling pressure.
The analyst concluded that historically, this type of misalignment—price increases amid the capitulation of "weak hands"—has created favorable market entry opportunities. The current situation confirms the structural strength of the trend, despite panic among retail participants.
It is worth noting that in December, analyst Woominkyu predicted a potential transition of the leading cryptocurrency into a bear phase.