On July 23, Bitcoin found a cap at approximately $118,000. Market participants are highly attuned to the $120,000 vicinity for clues as to the cryptocurrency’s next big move. If Bitcoin breaks out and sustains above $120,000, it will likely send Bitcoin on a path toward its all-time high of $123,218. On the flip side, if it breaks down below $118,000, a test of support around $112,000 could be in order.
The picture that emerges of the digital asset’s market dynamics is a punchy bullish vs. bearish tug of war. The 4-hour Supertrend indicator is still in bearish territory under $120,539. Buying pressure past the 20 and 50 Exponential Moving Averages (EMAs) indicates that bullish momentum remains strong.
Bitcoin’s trading volume has dropped by 15%, as it currently stands at $90.8 billion. Likewise, open interest is down 1.81%, currently at $84.22 billion.
US Dollar Index (DXY) is in the process of turning over and trading just above 97.00. This downturn is offering a reprieve to risk assets, instrumental in bolstering Bitcoin’s market structure.
Fears of a possible market correction are increasing amid the appearance of a TD Sequential sell-signal on Bitcoin’s quarterly chart. In the past, this same signal has preceded major corrections, much like those seen during 2015 and 2018 troughs. Bitcoin price fell during those corrections by up to 85% from all-time high.
Low Bitcoin inflow to exchanges is very bullish. Rather, the market structure for Bitcoin itself is extremely strong. On top of that, there’s no indication of a double-top pattern so a quick fall is out of the question.
Yet, analysts caution that failure to soon breach a new all-time high could trigger a substantial price correction, potentially leading to a 50% drop. If Bitcoin cannot hold its crucial levels, it may enter a correction. This may force the price to retest the Fibonacci support zone between $107,000 and $111,000.
We advise all market participants to continue to watch Bitcoin’s price action closely. Watch closely specifically for its direction in breaking of $120,000 resistance and $118,000 support. These levels could dictate Bitcoin's short-term trajectory.
