Bitcoin due dollar-fueled macro bottom as traders dismiss $88K bounce

Bitcoin (BTC) recovered through $88,000 after Monday’s Wall Street open as analysis called core demand “intact.”

Key points:

• Bitcoin attempts to maintain a bounce after hitting new 2026 lows of $86,000.

• Traders see downside resuming as markets grapple with uncertainty across the board.

• Research still says that Bitcoin has a solid demand base.

BTC price seen following dollar downhill

Data from TradingView showed BTC price action continuing to bounce from new 2026 lows seen at the weekly close.

After a disappointing weekly candle sparked warnings of further downside in crypto analytics circles, traders had little faith in Monday’s rebound lasting.

“I believe the maximum extension is likely around 89–91K before further downside,” trader Killa wrote in his latest post on X.

Fellow trader BitBull eyed declining US dollar strength as a cue for BTC/USD to put in a characteristic long-term low.

“This is a very crucial chart for $BTC holders,” he told X followers alongside a chart of the US dollar index (DXY). 

“Whenever DXY has dropped below 96 in the past, Bitcoin has bottomed. Even the 2 biggest rallies in BTC happened when DXY went below 96. And now, the DXY crash seems imminent. We all know what that means.”

Dollar weakness formed just one of many macroeconomic hurdles for risk-asset traders on the day, with Japan, US trade tariffs and the Federal Reserve interest-rate meeting all on the radar.

A further problem came in the form of a potential US government shutdown taking effect from Jan. 30.

“The situation bears resemblance to last autumn’s protracted fiscal standoff, which coincided with a sharp drawdown in crypto markets,” trading outfit QCP Capital wrote in its latest “Asia Color” market update.

QCP forecast that crypto markets were “likely to chop around in the near term, pending greater clarity, particularly around the risk of a U.S. government shutdown.”

IG: Bitcoin avoiding structural “breakdown”

On a more optimistic note, however, new research released by CFD and forex provider IG on the day retained belief in Bitcoin’s underlying strength.

Related: BTC price ‘bottoming phase’ ends: Five things to know in Bitcoin this week

Notwithstanding the various macro risks and poor performance versus stocks and other assets, BTC still enjoyed a demand base, IG argued.

“Despite the sharp decline, the Monday’s recovery suggests that underlying demand remains intact,” the research stated. 

“Longer-term investors appear more willing to absorb supply at lower levels, viewing the move as a correction driven by positioning and macro shocks rather than a breakdown in Bitcoin’s structural outlook. This helped prices stabilise and rebound, even if the recovery has so far been measured rather than decisive.”

IG gave resistance areas around $94,000 and $100,000 as longer-term targets, with $86,000 still important to avoid in the event of a fresh dip.

“​Looking ahead, Bitcoin’s near-term trajectory will likely depend on whether broader market conditions stabilise and whether buyers can build on the recovery without renewed selling pressure,” it added.

“​For now, the sharp sell-off and subsequent minor rebound serve as a reminder that even in a more mature phase of the cycle, Bitcoin remains highly responsive to shifts in sentiment, liquidity and risk appetite.”