Is Bitcoin's $110K Support Zone a Catalyst for a Major Bullish Reversal?

Bitcoin’s price has been locked in a critical consolidation phase around the $110K support zone, a level that has emerged as a psychological and structural fulcrum for the market. This juncture is not merely a technical inflection point but a confluence of on-chain accumulation trends and institutional-driven dynamics that could catalyze a major bullish reversal.

On-Chain Accumulation as a Confidence Indicator

The decline in Bitcoin exchange reserves has become a defining feature of Q3 2025, with on-chain data revealing a sharp drop from 3.25 million BTC to 2.55 million BTC. This represents a 21.5% reduction in liquidity available for immediate selling, signaling robust accumulation by long-term holders and institutional investors [1]. Entities like MicroStrategy have further reinforced this trend, with their Bitcoin holdings now valued at $70 billion, including $23 billion in unrealized gains [1].

The UTXO Realized Price Distribution (URPD) provides additional clarity: investors have been systematically absorbing Bitcoin in the $108k–$116k range, a classic dip-buying pattern [2]. This behavior suggests that market participants view Bitcoin’s current correction as an opportunity rather than a crisis. Meanwhile, the MVRV Z-Score—a metric measuring the ratio of realized to market value—stands at 2.49, indicating an overbought condition. Yet, institutional support has kept volatility in check, preventing a cascading sell-off [3].

The decline in exchange reserves to multi-year lows is historically correlated with bullish reversals. With Bitcoin ETFs now holding 1.3 million BTC, the market has transitioned into an institution-led paradigm, where short-term retail volatility is increasingly decoupled from long-term capital flows [3].

Technical Consolidation at $110K: A Structural Battleground

On the daily chart, Bitcoin’s breakdown below an ascending channel has created a critical test of the $110K support zone. This level aligns with the 100-day moving average, a dynamic support line that has historically acted as a floor during corrections. The Relative Strength Index (RSI) currently sits at 44, reflecting weak momentum but not oversold conditions, suggesting the market is in a “pause phase” rather than a capitulation event [1].

The 4-hour chart reveals a more nuanced picture. Bitcoin is retesting the $110K–$111K zone, with RSI hovering around 49—a neutral reading that underscores indecision among traders [1]. A successful defense here could trigger a rally toward $114K, where profitability for short-term holders rebounds to 60%. However, a breakdown below $109K would invalidate the immediate bullish case, potentially dragging price toward the $104K demand zone [2].

The interplay between on-chain and technical signals is striking. Declining exchange reserves reduce the supply available for short-term selling, while the $110K zone acts as a magnet for buyers who perceive value. If this support holds, the next resistance at $116K could act as a gateway to the $124K all-time high, particularly if institutional inflows accelerate [1].

Strategic Positioning for the Next Move

For investors, the $110K zone represents both a risk and an opportunity. A successful defense would validate the thesis of an institution-led bull market, with Bitcoin ETFs and corporate treasuries providing a floor. Conversely, a breakdown would test the resilience of the $104K zone, which has historically been a critical support level during prior corrections.

Positioning ahead of the next major move requires a dual focus:
1. On-Chain Signals: Monitor exchange reserves and UTXO distribution for signs of continued accumulation. A rebound above $114K–$116K would likely trigger a surge in retail and institutional demand [2].
2. Technical Confirmation: Watch for a bullish reversal pattern (e.g., a higher low or a break above the ascending channel) on the daily chart. A close above $116K would likely see Bitcoin targeting $124K, with the MVRV Z-Score normalizing as a key indicator of market health [3].

Conclusion

Bitcoin’s $110K support zone is more than a technical level—it is a battleground where on-chain fundamentals and institutional narratives intersect. The confluence of declining exchange reserves, strategic accumulation in key price ranges, and institutional buying power creates a compelling case for a bullish reversal. While risks remain, the data suggests that this support zone could serve as the catalyst for a move toward $124K, provided it holds firm. Investors who align their strategies with these signals may find themselves well-positioned for the next leg of the bull cycle.

Source:
[1] Q3 2025 Bitcoin Valuation Report [https://www.chaincatcher.com/en/article/2199982]
[2] The Week On-Chain: Week 35, 2025 [https://insights.glassnode.com/the-week-onchain-week-35-2025/]
[3] Bitcoin Price Analysis: Is This BTC's Calm Before Another Major Storm? [https://cryptoadventure.com/bitcoin-price-analysis-is-this-btcs-calm-before-another-major-storm]