Bitcoin has recovered above 88,000 USD after Wall Street opened on Monday, and analysis shows that underlying demand remains "untouched".
Key Points:
Bitcoin is attempting to sustain a bounce after reaching new 2026 lows of 86,000 USD.
Traders see continued downside as markets grapple with uncertainty on all fronts.
Research still indicates that Bitcoin has a solid demand base.
BTC Price Follows Dollar in Decline
Data from TradingView shows that BTC price continues to recover from new 2026 weekly closing lows.
After a disappointing weekly candle that triggered warnings of further downside among crypto analysts, traders had little faith that Monday's recovery would last.
"I believe the max upside is probably around 89-91K before further downside," trader Killa wrote in his latest post on X.
Fellow trader BitBull observed the declining strength of the U.S. dollar as a sign that BTC is entering a characteristic long-term bottom.
"This is a very key chart for $BTC holders," he told followers on X alongside a chart of the U.S. dollar index (DXY).
"Every time DXY has fallen below 96 in the past, Bitcoin has bottomed. Even the two biggest BTC rallies happened when DXY fell below 96. And now it seems the DXY drop is inevitable. We all know what that means."
Dollar weakness was just one of many macroeconomic hurdles for risk asset traders that day, with Japan, U.S. trade tariffs, and the Federal Reserve's interest rate meeting on the radar.
An additional issue was the potential U.S. government shutdown set to take effect from January 30.
"The situation reminds of last year's prolonged fiscal standoff in the fall, which coincided with a sharp decline in crypto markets," trading firm QCP Capital wrote in its latest "Asia Color" update.
QCP predicted that crypto markets would "likely fluctuate in the short term, awaiting greater clarity, especially around the risk of a U.S. government shutdown".
IG: Bitcoin Avoids Structural "Breakdown"
On a more optimistic note, new research published by CFD and forex provider IG that day maintained faith in Bitcoin's underlying strength.
Despite various macro risks and underperformance relative to stocks and other assets, BTC still enjoys a demand base, IG claims.
"Despite the sharp decline, Monday's recovery suggests that underlying demand remains untouched," the research states.
"Long-term investors appear willing to absorb supply at lower levels, viewing this move as a positioning-driven correction and macro shocks, rather than a breakdown in Bitcoin's structural outlook. This has helped stabilize and recover prices, although the recovery so far has been moderate, not decisive."
IG cited resistance areas around 94,000 USD and 100,000 USD as long-term targets, with 86,000 USD still important to avoid in case of a new decline.
"Looking ahead, Bitcoin's short-term trajectory will likely depend on whether broader market conditions stabilize and whether buyers can build on the recovery without renewed selling pressure," it added.
"For now, the sharp drop and subsequent minor recovery serve as a reminder that even in a more mature cycle phase, Bitcoin remains highly sensitive to changes in sentiment, liquidity, and risk appetite."
(Source: Cointelegraph via TradingView, January 26, 2026.)
