Data from prediction market platform Polymarket, released on January 4, suggests that Bitcoin’s price is likely to rise in the short term, reflecting improving market sentiment despite recent volatility.

? NOW: Polymarket users are leaning bullish on $Bitcoin. pic.twitter.com/8eAFHSz7Ho

— ?????? ?????? (@Karman_1s) January 4, 2026

Bullish Market Sentiment and Bitcoin Price Forecasts

According to Polymarket, the probability that Bitcoin (BTC) reaches $95,000 by January 2026 stands at 71%, indicating strong confidence among traders in a near-term rebound.

However, expectations become more cautious at higher levels. The probability of Bitcoin hitting the $100,000 milestone is currently estimated at 37%, suggesting that while optimism is growing, investors remain divided on the pace of the rally.

Downside risks appear relatively limited. Polymarket data shows a 39% chance that Bitcoin falls to $85,000, while the likelihood of a deeper drop to $80,000 is just 19%. Many market participants view any temporary pullback as a potential buy-the-dip opportunity rather than a trend reversal.

Trader positioning also reflects bullish sentiment. Data from major crypto exchange Binance reveals that approximately 67% of traders currently hold long positions, signaling expectations of further upside despite recent corrections.

Bitcoin has declined more than 30% from its October 2025 peak and closed the year with a roughly 6% annual loss, marking its first yearly decline in three years. Even so, the market appears to be positioning for a recovery.

Rebound Signals and Key Risks to Watch

Technical analysts point to the possibility of a so-called “Christmas bear trap,” a pattern in which prices briefly break below key support levels before sharply rebounding as sellers exit and buyers step in.

Historically, Bitcoin has often staged strong rebounds in January following year-end declines, and analysts note that macroeconomic factors—such as potential U.S. interest rate cuts—could support a price recovery in 2026.

That said, risks remain. Slowing inflows into Bitcoin exchange-traded funds (ETFs) and broader uncertainty tied to U.S. trade and tariff policies under President Donald Trump could weigh on sentiment.

ETF flows are considered a key driver of price discovery, and traders are closely watching the $90,000 level. A decisive break above this threshold could accelerate momentum toward $100,000, according to market observers.

Institutional Outlook and the Growth of Prediction Markets

Despite near-term uncertainty, institutional forecasts remain optimistic. Citi Research has set a 12-month Bitcoin price target of $143,000, underscoring continued long-term confidence among major financial institutions.

Meanwhile, prediction markets themselves are gaining credibility. Research firm Clear Street estimates that the sector could grow into a $14 billion market by 2030. Major exchanges such as Coinbase and Gemini have already entered the space, with increased institutional participation expected.

Analysts caution that traders should remain patient and data-driven until a clear breakout confirms the next major trend.