Bitcoin appears to have reached an important turning point after a quiet decline. With a rare historical signal seen ahead of the 2020 bull market in sight, an analysis says a further 4.5 percent rise alone could change the market landscape.

BeInCrypto, a blockchain media outlet, reported on Jan. 11 that bitcoin has been in a mild correction since hitting a peak on Jan. 5, but has avoided a sharp drop. Bitcoin is currently down about 4.5 percent from a year earlier, posting a slightly negative return on an annual basis.

That 4.5 percent figure has meaning beyond a simple drop. Historically, it has been rare for bitcoin's annual price change to turn negative and then flip back to positive, and it has served as a signal for major trend shifts. A similar pattern appeared in July 2020 and was followed by a strong rally.

Bitcoin is currently moving just below that turning point. If the price rises by about 4.5 percent more, the annual change would turn positive again, raising the possibility of a similar move to past patterns.

Technical charts also support the significance. Bitcoin is trading in the handle phase of a cup and handle pattern. The bullish pattern typically seeks a breakout after a rounded recovery and a short-term pullback, and the measured breakout target also aligns with the roughly 4.5 percent upside zone.

Short-term trend indicators are also sending positive signals. Bitcoin has recently reclaimed the 20-day exponential moving average and is holding that area as support. In the past, there have been cases where bitcoin rose by around 7 percent in a short period after regaining the 20-day EMA. When it fell below that level, a relatively quick pullback followed.

The next hurdle is the 50-day EMA. Bitcoin saw a pullback after falling below this level in mid-January, and reclaiming it again could be read as a stronger signal of a trend shift.

On-chain data also add weight to a bullish scenario. Exchange inflows, one indicator used to gauge selling pressure, fell to their lowest level in six months. Daily exchange inflows dropped from about 78,600 BTC in November last year to about 3,700 BTC recently, a decline of more than 95 percent. That suggests selling pressure in the market has eased significantly.

An interesting trend is also being observed in the derivatives market. The cumulative value of short-position liquidations over the next seven days is about $4.1 billion, far above long-position liquidations of about $2.17 billion. An excessive build-up of short positions could trigger buying pressure from forced liquidations if prices rise.

Key price levels are also clear. If bitcoin closes above $94,880 on a daily basis, it would complete a cup and handle breakout, aligning with a 4.5 percent reversal in the annual change. An analysis says the short-term target in that case is $99,810, with room for further gains to $106,340.

On the downside, $89,230 is cited as the first major support level. If that zone breaks, the likelihood of a pullback to $86,650 increases, and the current bullish structure could be invalidated.

Market experts assess that bitcoin is currently in a very narrow price channel. With selling pressure easing and technical support holding, attention is focused on direction as the historically rare 4.5 percent reversal signal approaches.