Bitcoin's Critical $117,000 Support and the Impending Bullish or Bearish Divergence

In July 2025, Bitcoin's price action around the $117,000 support level has become a focal point for traders navigating a highly leveraged crypto market. The level, once a psychological barrier, has transformed into a structurally significant zone after a multi-year bullish megaphone breakout confirmed by institutional analysts. The recent consolidation between $115,724 and $122,077 has created a symmetrical triangle pattern, with the upper resistance near $119,200 and the lower support around $116,000. This tightening structure suggests a critical juncture: a breakout above $122,077 could trigger a sharp rally toward $140,000, while a breakdown below $117,000 risks a deeper correction to $100,000 or even the Q1 2025 accumulation zone at $93,000.

Technical Analysis: A Battle for Control

Bitcoin's recent price action reflects a tug-of-war between bullish conviction and bearish skepticism. The 4-hour chart shows a compressed symmetrical triangle, with volume shifting to the upper and lower boundaries as traders anticipate a breakout. The $117,000 level, reinforced by an inverse head and shoulders pattern on the daily chart, has acted as a floor for multiple pullbacks. A successful retest of this level—confirmed by a close above $118,000—would validate the bullish case, with the projected target at $125,500. Conversely, a sustained close below $117,000 could reignite bearish sentiment, particularly if it coincides with a breakdown of the lower trendline of the megaphone pattern.

Coinglass Liquidation Heatmaps: A Warning for Leveraged Traders

The Coinglass liquidation heatmaps reveal a volatile futures market, with $28.6 million in long liquidations and $25.2 million in short liquidations within a 24-hour period in early July. This dual-sided flush indicates a rapid shift in sentiment, driven by headline-driven volatility and macroeconomic uncertainty. For leveraged traders, the data underscores the risks of overexposure: positions near $119,000 are particularly vulnerable, as they align with the upper boundary of the symmetrical triangle. A sharp move above or below this range could trigger cascading liquidations, amplifying price swings.

On-chain behavior adds further complexity. The NVT Golden Cross, a metric comparing Bitcoin's market cap to transaction volume, has surged to 1.98, nearing the historical “overheated” threshold of 2.2. While a high NVT ratio typically signals overvaluation, the recent divergence—where Bitcoin's price has risen despite declining NVT—suggests that the rally is supported by real on-chain activity rather than speculative frenzy. However, the shift in holder behavior, with long-term holders net distributing and short-term holders net accumulating, mirrors patterns seen in late-stage bull markets. This rotation could signal a top, particularly if combined with a breakdown of $117,000.

Risk Management in a Leveraged Market

For traders navigating this high-stakes environment, risk management is paramount. Here are three actionable strategies:

1. Position Sizing and Stop-Loss Placement:
2. Traders bullish on Bitcoin should consider scaling into positions near $117,000, with tight stop-losses below $115,000 to protect against a breakdown.

3. Bearish traders should focus on shorting only if the price closes below $117,000, with stops above $119,000 to avoid false signals.

4. Hedging with Options:

5. Longs can hedge downside risk by purchasing put options with strike prices near $115,000, while shorts can use call options to limit losses if the market rallies.

6. Monitoring On-Chain Metrics:

7. Watch the NVT Golden Cross and holder activity. If the NVT crosses 2.2 and long-term holders begin net accumulation again, it could signal a bullish reversal. Conversely, a sustained drop in open interest below $95 billion may indicate waning institutional demand.

The Path Forward: Rebound or Correction?

The coming weeks will be pivotal. A breakout above $122,077 could reignite the bullish momentum, with the potential for a multi-week rally to $140,000. This scenario is supported by rising ETF inflows—$54.47 billion in cumulative net inflows across major Bitcoin ETFs—and institutional accumulation, including public companies like Strategy Inc. adding 248,000 BTC in July. However, a breakdown below $117,000 could trigger a retest of the Q1 2025 accumulation zone at $93,000, particularly if macroeconomic factors (e.g., Fed policy delays) weigh on risk assets.

Conclusion: Discipline in Uncertainty

Bitcoin's $117,000 support is more than a technical level—it's a barometer for market sentiment in a leveraged, speculative environment. Traders must balance optimism with caution, using technical patterns, on-chain data, and risk management tools to navigate the impending divergence. Whether the market reclaims $122,000 or succumbs to bearish pressures, the key to survival lies in disciplined execution and a clear-eyed assessment of the risks. As the crypto market enters its next phase, those who adapt will find opportunities in both volatility and clarity.