Bitcoin’s Next Move: Battle at $118K Could Shape Its Fate

Bitcoin's recent price action has generated significant market attention, with the cryptocurrency trading near key technical levels that could signal the start of a major breakout. As of early September 2025, Bitcoin (BTC) has been consolidating above $115,000, marking a notable recovery after a volatile week that saw swings between $124,500 and $111,600. The market’s behavior reflects broader macroeconomic expectations, particularly in response to Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole symposium, where he indicated that rate cuts could arrive as soon as September. These comments spurred increased risk appetite, which has translated into higher demand for cryptocurrencies like Bitcoin.

Institutional and retail investors are closely watching the price action around $117,500–$118,000, a critical resistance zone. This area has historically capped Bitcoin’s upward momentum on multiple occasions, with over $3 billion in short positions clustered near $117,800, as revealed by Coinglass data. Traders and analysts suggest that a decisive breakout above $118,000 could lead to a short squeeze and potential retesting of the $120,000 level. If Bitcoin fails to break through, it may face renewed selling pressure and a pullback toward $110,000 or even $105,500, which coincides with the 200-day moving average.

The recent price rebound has seen a significant accumulation of Bitcoin between $112,000 and $114,000, with over 120,000 BTC acquired during this period, indicating opportunistic buying. However, Glassnode data highlights a structural challenge: supply within the $110,000–$116,000 range remains sparse, creating an "air-gap" that limits reliable support. This suggests that while the short-term trend appears bullish, the market lacks the density of long-term holders needed to sustain a meaningful breakout.

On-chain metrics and network activity remain mixed, further complicating the outlook. While Bitcoin has seen a rare inflow of $33.25 million in spot netflow on August 7, breaking a months-long pattern of outflows, the broader trend has been inconsistent. Transaction volume and network growth have shown extreme volatility, with recent figures dropping to 131K and 219K, respectively. This points to a slowdown in user engagement, which is historically a precursor to price stagnation or correction.

Investor sentiment has also been influenced by Bitcoin ETF flows, which have shown mixed results. While Bitcoin ETFs recorded outflows of $1.2 billion since August 15, Ethereum ETFs attracted over $330 million in inflows, signaling a clear rotation of capital into altcoins. This divergence in fund flows suggests that Bitcoin is facing increased competition for investor attention, particularly in the aftermath of Powell's remarks.

Looking ahead, the next few days will be critical in determining the direction of Bitcoin’s price. If BTC can maintain a sustained hold above $115,000 with increasing volume and consistent buyer demand, it could push toward $118,000 and beyond. Conversely, a failure to defend this level may lead to renewed bearish pressure and a deeper pullback. Analysts emphasize that a clean breakout will require not only a price move but also stronger user participation and on-chain activity to confirm the trend.