Bitcoin Drops 0.6% After Rally Reaches $118,667

Bitcoin, the world’s leading cryptocurrency, has experienced a significant rally, reaching a new all-time high of $118,667 last week. However, it has since taken a breather, currently trading around $117,953. This pause follows a series of consecutive daily gains that swept across the crypto industry, driving bullish momentum.

Crypto analyst RLinda shared a technical analysis on the TradingView platform, outlining two potential scenarios for Bitcoin’s next moves. The first scenario involves Bitcoin failing to hold above a support area below $117,500. If this happens, the cryptocurrency could face a cascade of corrections, potentially driving the price down to $115,500, then to $114,300, and even back to the previous all-time high of $111,800. Below these levels, the 0.5 and 0.705 Fibonacci levels around $113,031 and $111,960 respectively may act as temporary cushions. The last major defensive buy zone is around $110,400, where bulls may step in for a bounce. This means that if Bitcoin loses the support level at $115,500, it could slip back to $110,000 before encountering another strong buy support zone.

The second scenario involves Bitcoin pushing above $118,000 and increasing to $125,000. This would require a decisive daily close above $118,400 and $118,900, which would hint at a “breakout of structure” and confirm a transition from consolidation into another impulsive phase upward. Both the bearish and bullish outlooks depend on how Bitcoin reacts at any of the important zones, either support at $116,700 or resistance above $118,400 before making a directional move. However, it is important to note that the consolidation after last week’s rally could last for weeks or even months, much like we’ve seen in previous rallies this cycle.

According to the Long-Term Holder Net Unrealized Profit and Loss (NUPL) metric from Glassnode, Bitcoin’s current level of long-term profitability sentiment is at 0.69. This is notably below the 0.75 mark associated with euphoric market conditions, despite Bitcoin having just printed a new all-time high. Bitcoin spent around 228 days above the 0.75 euphoria threshold in the previous bull market cycle. In contrast, this current cycle has only seen about 30 days above that level, which suggests long-term holders have not yet fully exited into profit and the leading cryptocurrency hasn’t reached overheated conditions.