Bitcoin Recovers In January: Funding Divergence Points To A Spot-Driven Market

Bitcoin is trying to hold above the $91,000 level as the market searches for support, but demand remains fragile after weeks of volatility. While the recent decline has pressured sentiment, a CryptoQuant report suggests January is still shaping up as a recovery phase rather than a full breakdown. The analysis points to cautious optimism driven by institutional and whale-level accumulation, while retail participation remains hesitant and risk-averse.

According to Binance-related data, Bitcoin’s spot price action and funding rates have started to diverge in early 2026, signaling a spot-driven market environment. This setup is often viewed as constructive because it implies the latest move is being supported more by real spot buying than by excessive leverage in derivatives. In practice, a spot-led trend tends to reduce the risk of sudden liquidation cascades, which have recently amplified downside moves across the crypto market.

CryptoQuant notes that spot-driven conditions can also create more durable rallies, since they attract organic inflows and allow price to climb without relying on unstable speculative positioning. Historical comparisons to the 2021 and 2024 cycles show similar divergences between spot strength and muted funding rates often preceded extended upside expansions, ranging from 20% to 50%.

Is the Four-Year Bitcoin Cycle Breaking Down?

The CryptoQuant report raises a bigger question that many investors are now debating: is the traditional four-year Bitcoin cycle starting to fade? As the market matures, analysts argue that the old post-halving pattern may no longer apply in the same way. Since 2024, spot Bitcoin ETFs and corporate treasuries have been absorbing a growing share of supply, potentially creating steadier demand and reducing the boom-and-bust dynamics that defined prior cycles.

This argument gained traction in 2025. Despite being a post-halving year, Bitcoin failed to deliver the type of parabolic rally seen in previous cycles, while altcoins also struggled to produce a true “altseason.” That divergence has led some analysts to conclude that halvings are becoming less dominant as a driver, especially now that Bitcoin trades as a $2T+ macro asset.

Instead, market direction may be increasingly shaped by global liquidity conditions, including Federal Reserve policy, M2 growth, geopolitical risk, and large-scale institutional flows. Analysts like Raoul Pal have framed this as a shift toward longer liquidity cycles that could last five years or more, reinforcing the idea that the four-year framework may be outdated.

The report also highlights Binance as a critical reference point. Historically favored by whales, Binance remains a major leading indicator for broader crypto market positioning and flows.

Bitcoin Weekly Chart Signals Fragile Recovery

Bitcoin is attempting to stabilize after weeks of heavy selling pressure, but the weekly structure still reflects a market fighting to reclaim lost ground. BTC is trading near $91,075 after printing a sharp weekly pullback, reinforcing that volatility remains elevated even as price tries to base. The recent rebound from the sub-$85,000 region shows buyers stepping in aggressively, yet the recovery still looks fragile while broader macro uncertainty keeps risk appetite limited across crypto.

From a technical perspective, Bitcoin is hovering around the zone where previous support has flipped into resistance. Price is currently sitting near the rising 100-week moving average (green), which is acting as a key pivot for bulls. Holding above this level would signal that demand is strong enough to absorb supply during dips. However, the 50-week moving average (blue) has rolled over and remains above price, highlighting that the broader trend has not fully reset bullish momentum.

The 200-week moving average (red) continues to trend higher far below current levels, confirming the long-term uptrend remains intact. For now, the market likely needs a clean weekly reclaim above $95,000 to shift sentiment. Until then, this bounce risks being treated as corrective rather than trend-confirming.

Featured image from ChatGPT, chart from TradingView.com