Bitcoin's Bull Cycle Reaches a Sensitive Inflection Point

Bitcoin traded near $113,000 on Wednesday as softer-than-expected producer price inflation data boosted market sentiment, with Ethereum, XRP, and Dogecoin extending their gains. The broader cryptocurrency market responded positively to the data, which reduced expectations for prolonged high interest rates in the U.S., a key factor for risk assets. According to the CME FedWatch tool, the probability of a rate cut at the Federal Reserve’s Sept. 17 meeting stands at 90%, a development that could further bolster Bitcoin and altcoins.

Bitcoin’s price action revealed mixed signals about the broader market sentiment. On one hand, technical indicators showed that the asset had broken above key resistance levels, including the 20-day moving average, suggesting a potential rally could be on the horizon. Analysts noted that Bitcoin’s monthly Bollinger Bands were at the tightest compression in 15 years, historically a precursor to significant price movements. On the other hand, several traders and analysts warned that the market is nearing a historically sensitive correction point, as 88% of Bitcoin supply is currently in profit, a level that has historically triggered sell-offs.

Ethereum, XRP, and Dogecoin continued their upward trajectories, with Ethereum reaching $4,332.17, XRP hitting $2.99, and Dogecoin trading at $0.2431. Ethereum’s price has been constrained within a narrow range for several days, but analysts suggest that a break above $4,500 could trigger a broader rally toward $5,500. Similarly, XRP has tested the $2.91 level, with a break above the 20-day EMA signaling a potential move toward $3.15 and beyond.

The broader market dynamics were also influenced by on-chain data. Coinglass reported that $244.78 million in liquidations occurred over the past 24 hours, with 139,026 traders affected. This highlights the high volatility and leverage present in the market, particularly among speculative traders. Meanwhile, Glassnode’s analysis indicated that Bitcoin is in a classic consolidation phase following a bull market peak, with a key threshold at $104,000 representing the next critical level for sellers to exhaust their positions.

Axel Adler, a top analyst, highlighted the current phase as a mature stage of the bull cycle, with Bitcoin exhibiting late-cycle behavior marked by increased volatility and profit-taking. Unlike previous bull runs, the current cycle has shown a more sustainable redistribution pattern, with selling pressure from long-term holders occurring in segmented waves rather than one explosive top. This is attributed to the growing influence of institutional demand and corporate treasuries absorbing supply after each new all-time high.

Bitcoin’s price remains highly sensitive to macroeconomic developments and central bank policies. As the market absorbs supply in batches and navigates key technical levels, investors are closely watching the Federal Reserve’s upcoming meeting for signals on the trajectory of interest rates. A rate cut could further support risk assets, while a delay might reintroduce volatility. Traders and analysts remain divided on the potential direction, with some predicting a rally toward $167,000 to $185,000 by year-end.