Bitcoin’s $118k Breakout Looms as Sovereign Sells Threaten Uptrend

Bitcoin’s price trajectory has drawn renewed attention as analysts highlight potential support and breakout levels amid evolving macroeconomic dynamics. On September 18, 2025, Bitcoin (BTC) briefly surged past $117,000 following the U.S. Federal Reserve’s first rate cut of the year, reducing the federal funds rate by 25 basis points to a range of 4.00-4.25%. Despite the initial optimism, the market exhibited mixed reactions, with Bitcoin consolidating around $115,000–$117,000 in subsequent sessions. Analysts now suggest that $109,500 could serve as a critical support level, with a potential breakout above $118,000 signaling further upward momentum.

The Fed’s dovish pivot has historically supported Bitcoin by reducing the opportunity cost of holding non-yielding assets, yet the market’s muted response post-rate cut has raised concerns. Ryan Lee, chief analyst at Bitget Exchange, noted that Bitcoin has historically dipped 5–8% after rate cuts before resuming its upward trend, indicating a possible “sell the news” phase. Short-term volatility remains elevated as traders balance expectations of additional rate cuts with potential selling pressure from sovereign actors. For instance, Bhutan’s recent transfer of $107 million in Bitcoin to new wallets has intensified scrutiny, though the country still holds 9,652 BTC worth $1.13 billion, suggesting its broader strategy may not hinge on immediate liquidation.

Looking ahead, Q4 price projections have gained traction, with some forecasts targeting $131,000–$135,000 as potential highs. These estimates are predicated on a continuation of accommodative monetary policy and sustained ETF-driven inflows. Ethereum and Solana are also expected to outperform in the near term, driven by network upgrades and speculative demand. However, the path to these levels is not without risks. If Bhutan or other large holders liquidate significant portions of their reserves, it could introduce downward pressure, particularly in a market where the top 2% of addresses control over 90% of Bitcoin’s supply.

Market participants are closely monitoring both macroeconomic indicators and on-chain activity. The Fed’s median projection of 50 basis points in total cuts for 2025 has tempered immediate optimism, while the divergence between futures and spot market volumes—spiking leveraged positions without robust spot demand—highlights fragility. Analysts caution that without sustained buying pressure, price corrections could occur if leveraged positions unwind.

The interplay between central bank policies and sovereign Bitcoin holdings is reshaping market dynamics. Bhutan’s strategic transfers, coupled with the Fed’s rate cuts, underscore the complexity of price discovery in an era where institutional and governmental actors wield significant influence. While the fundamentals for Bitcoin remain bullish in a low-rate environment, the timing and scale of large-scale selling events could dictate short-term volatility.