Bitcoin's Critical RSI Support Level and Its Implications for Short-to-Medium-Term Price Action

Bitcoin’s price action in August 2025 has created a complex tapestry of technical and fundamental signals, offering both caution and opportunity for investors. The Relative Strength Index (RSI) currently sits at 38.62, nearing oversold territory but failing to confirm a bullish reversal due to bearish divergence—where the RSI has not formed higher highs despite price consolidation near $108K [1]. This divergence, however, is not uniform: shorter timeframes like the four-hour RSI show potential bullish divergence, suggesting a retest of higher levels could be imminent [1]. This duality creates a “divergence dilemma,” where short-term bearish momentum clashes with medium-term structural support from macroeconomic and institutional factors.

Key Support Levels and Strategic Positioning

The $112K level has emerged as a critical inflection point. It aligns with Bitcoin’s 50-day and 100-day exponential moving averages and serves as a psychological threshold for both retail and institutional players [1]. A weekly close above $114K could reignite bullish momentum, while a breakdown below $110K risks triggering deeper corrections toward $91K or even $70K [2]. The $91K level, historically a floor during the 2024 sell-off, now acts as a secondary support, with on-chain data suggesting increased accumulation by whales and ETFs in this range [3]. Meanwhile, $70K is seen as a “hard stop” by analysts, where systemic risk aversion and macroeconomic tailwinds (e.g., the 2025 halving and Fed rate cuts) could catalyze a rebound [4].

Institutional Accumulation and Retail Caution

On-chain metrics reveal a stark contrast between institutional and retail positioning. Institutional actors, including corporate treasuries and sovereign entities, now control 15% of Bitcoin’s total supply, with 951,000 BTC accumulated in 2025 alone [5]. This accumulation is reinforced by ETF inflows, such as BlackRock’s IBIT, which has attracted $70 billion in assets under management [5]. The Gini coefficient of 0.4677 underscores the concentration of Bitcoin among large holders, a pattern reminiscent of the 2019 bull market [5].

Retail sentiment, however, remains cautious. The Fear and Greed Index stabilized at a neutral 50, reflecting reduced panic-driven trading [5]. Short-term holders have reduced their UTXO buckets by 30–38% in Q1–Q2 2025, indicating a flight to safety [5]. This divergence between institutional confidence and retail caution creates a unique dynamic: while retail volatility could exacerbate short-term swings, institutional demand provides a floor for long-term price discovery.

Options Market Signals and Risk Management

The August 2025 options expiry highlighted a bearish bias, with a put/call ratio of 1.31 and max pain at $116K [6]. This suggests liquidity providers are incentivized to push Bitcoin toward $116K, where the largest number of options expire out of the money. However, the $112K level remains strategically significant due to its alignment with technical support and institutional accumulation.

For investors, this creates a measured entry opportunity. A long position above $112K could be justified by the following parameters:
1. Entry: $112K–$114K, with a stop-loss below $106.5K (a key support level identified in RSI analysis [1]).
2. Target: $125K, factoring in bullish divergence on shorter timeframes and macroeconomic tailwinds [1].
3. Risk Mitigation: A trailing stop at 5% below the entry price to lock in gains while allowing for volatility.

Conclusion

Bitcoin’s August 2025 landscape is defined by a tug-of-war between bearish technical indicators and bullish institutional fundamentals. While the RSI divergence and options market signals caution against overexposure, the accumulation by whales, ETFs, and sovereign entities provides a compelling case for strategic entry above $112K. Investors who adopt a disciplined approach—leveraging institutional confidence and macroeconomic catalysts—may find themselves well-positioned for a potential Q4 rally.

Source:
[1] Bitcoin's Divergence Dilemma: Is $125K Still in Reach or ... [https://www.ainvest.com/news/bitcoin-divergence-dilemma-125k-reach-bull-run-peaked-2508/]
[2] Bitcoin's Critical $114K Threshold: A Make-or-Break [https://www.ainvest.com/news/bitcoin-critical-114k-threshold-break-moment-bullish-momentum-2508/]
[3] Bitcoin's Institutional and Retail Synchronization: A Pre-Condition for a Major Price Breakout [https://www.ainvest.com/news/bitcoin-institutional-retail-synchronization-pre-condition-major-price-breakout-2509/]
[4] A New Era of Institutional Accumulation and Inflation Hedging [https://www.bitget.com/news/detail/12560604933881]
[5] The $15B Crypto Options Expiry: A Volatility Catalyst for [https://www.ainvest.com/news/15b-crypto-options-expiry-volatility-catalyst-bitcoin-ethereum-2508/]