Can Bitcoin Sustain Its Rally Amid Key Technical Levels and On-Chain Signals?

Bitcoin’s recent price action has ignited a critical debate: Is this rally structural, signaling a new bull market, or corrective, a temporary rebound before a deeper pullback? To answer this, we must dissect the interplay of technical price patterns and on-chain accumulation signals.

Technical Breakout: A Structural Shift or False Dawn?

Bitcoin has broken out of a descending channel—a key technical reversal pattern—after a prolonged downtrend from its 2025 all-time high of $123,000 [1]. This breakout, confirmed by a close above $113,500, suggests bulls are testing the validity of a trend reversal. However, the rally has been slow, raising questions about its sustainability.

The Stochastic RSI, a momentum oscillator, is now near overbought levels on the daily chart, historically preceding sharp corrections [2]. While this could signal exhaustion, the weekly Stochastic RSI is diverging bearishly, with its lines declining despite higher prices—a red flag for trend fatigue [2]. Renko charts add nuance: Bitcoin is in a downtrend but sits atop strong support. One or two more red bricks could trigger a green brick, confirming a new uptrend [1].

A critical test lies ahead. If Bitcoin closes above $113,650, it could target $119,500, a level where liquidity is concentrated [1]. Failure to hold above $108,300, however, risks a retest of $100,000 [1].

On-Chain Accumulation: A Bullish Undercurrent

On-chain metrics tell a different story. Bitcoin’s Cost Basis Distribution (CBD) shows dense clustering around $106,000–$110,000, indicating strong accumulation by long-term holders (LTHs) [2]. This contrasts with Ethereum’s sparse CBD, where price action is more derivative-driven [4]. The dense CBD implies defined support/resistance zones, with buyers stepping in at key levels.

Exchange netflows further reinforce this. Coinbase and Binance saw consistent inflows from August 25–31, 2025, marking a liquidity regime shift [1]. These inflows, following a 30-day SMA trough, historically precede reaccumulation phases before new highs [1]. LTH activity remains disciplined, with profit-taking levels well below cycle peaks—a sign of confidence in holding through volatility [2].

Macroeconomic tailwinds, including potential Fed rate cuts and regulatory clarity, add to the bullish case [3]. Yet, September’s historical weakness—a period often dubbed “Red September”—and recent ETF outflows introduce structural risks [3].

The Contradictions: A Tale of Two Indicators

The tension between technical and on-chain signals is palpable. While the Stochastic RSI hints at near-term corrections, on-chain metrics suggest a resilient base of accumulation. This duality reflects a market at a crossroads: Is this a cyclical low, or a bear market topping pattern?

Historical parallels offer caution. In 2017, Bitcoin mirrored its 2025 rally before a 80% correction. A breakout above $113,650 could reignite bullish narratives toward $150,000–$180,000 [3]. Conversely, a bearish RSI crossover below the 14-week SMA could trigger a drop to $95,000 [3].

Conclusion: A Structural Rally, But With Caveats

Bitcoin’s rally appears structural, underpinned by on-chain accumulation and controlled LTH distribution. The technical breakout, though fragile, aligns with historical patterns of cyclical lows in September [1]. However, the market must overcome seasonal headwinds and maintain buying pressure to sustain the trend.

For investors, the key is to balance optimism with caution. A close above $113,650 would validate the bullish case, but a pullback to $100,000 could test the resolve of the accumulation base. In a market where narratives shift rapidly, the interplay of technical and on-chain signals will remain the ultimate arbiter of Bitcoin’s fate.

**Source:[1] Can Bitcoin (BTC) Sustain Its Rally this time? Price Analysis [https://cryptodaily.co.uk/2025/09/can-bitcoin-btc-sustain-its-rally-this-time-price-analysis][2] Bitcoin (BTC): Breakout or Breakdown Ahead? Price Analysis [https://uk.investing.com/news/cryptocurrency-news/bitcoin-btc-breakout-or-breakdown-ahead-price-analysis-4200297][3] Will Bitcoin 2025 Finally Escape the “Red September” Curse? [https://www.equiti.com/sc-en/news/crypto-hub/will-bitcoin-2025-finally-escape-the-red-september-curse/][4] Glassnode 2025: BTC Spot Flows Dense vs ETH Air Gaps [https://blockchain.news/flashnews/glassnode-2025-btc-spot-flows-dense-vs-eth-air-gaps-cost-basis-distribution-signals-derivatives-led-eth-price-action]