Bitcoin's Breakout Hinge on $117,500 as Bulls Eye All-Time High

Bitcoin’s recent price action has drawn renewed attention from traders and analysts as the cryptocurrency surges past $118,000. Following a sharp dip and rebound after the U.S. Federal Reserve’s initial rate cut of 25 basis points on September 17, 2025, Bitcoin is now testing critical resistance levels that could determine whether it will challenge its all-time high of $124,000. Analysts have noted that if bulls can successfully reclaim and hold above $117,500, a path to $120,000 and beyond becomes more feasible.

The technical setup suggests a bullish bias, with Bitcoin stabilizing near key support levels and showing strength in on-chain metrics. On the 4-hour chart, the price has rallied after hitting the lower trendline of an ascending channel and the base of a bullish flag pattern. However, the $117,500 level remains a formidable barrier. A candle must not only close above this level but also open above it to confirm a breakout. Longer-term charts, such as the daily and two-week time frames, reinforce the importance of this resistance, with the price currently at a critical juncture.

Further support for the bullish case comes from the recent surge in Bitcoin derivatives activity. After breaking $118,000, the cryptocurrency recorded over $1.25 billion in liquidations in a single day, with the vast majority—$1.12 billion—coming from short positions. This indicates that traders had heavily anticipated a pullback that never materialized. Prominent traders, including James Wynn, suffered significant losses from leveraged short positions, while others observed this as the largest short squeeze in years. The growing Open Interest (OI) in Bitcoin derivatives markets, which reached an all-time high of $78.6 billion, suggests that traders are increasingly positioned for a continuation of the rally.

Institutional demand and favorable regulatory developments have also bolstered Bitcoin’s outlook. Publicly traded companies now hold over 628,000 BTC, worth more than $74 billion, with firms like MicroStrategy adding to their holdings. Additionally, spot Bitcoin ETFs have seen substantial inflows, with nearly $935 million entering the market on August 9, 2025. These trends are reinforced by regulatory tailwinds, including the introduction of a Bitcoin reserve in Texas and the passage of federal legislation such as the GENIUS and CLARITY Acts, which aim to clarify the status of digital assets.

Looking ahead, analysts are watching closely for confirmation of a breakout above $117,500. If successful, Bitcoin could target $120,000 and eventually move toward $131,000, a level outlined by market analyst Donald Dean based on Fibonacci extensions. Such a move would represent a roughly 13% increase from current prices, provided that the volume shelf between $116,000 and $118,000 continues to act as a support base. While optimism is growing, analysts caution that volatility remains high, and sudden news or macroeconomic shifts could trigger sharp corrections, especially given the elevated leverage in the derivatives market.

The broader context of global liquidity also plays a role in Bitcoin’s trajectory. Historical data shows a strong correlation between Bitcoin’s price and global M2 money supply growth. As central banks in the U.S., China, and Europe continue to expand liquidity, Bitcoin often anticipates these surges, sometimes months in advance. Analysts suggest that the current acceleration in global liquidity, combined with the upcoming Bitcoin halving in 2025, could create a powerful tailwind for the cryptocurrency. However, as with any market, caution is advised, especially for retail investors using high leverage in the derivatives space.