Bitcoin Drops 3% to $101,400 Amid Profit-Taking Fears Near $106,000

Bitcoin (BTC) has shown a bearish breakout from an ascending channel, with a significant risk of profit-taking near the $106,000 mark. On May 12, the price of Bitcoin reached an intraday high of $105,800 but subsequently dipped by 3% to $101,400 during the New York trading session. This price movement indicates a potential stalling of the bullish momentum, as Bitcoin oscillated within an ascending channel pattern before breaking below the bottom range of the pattern.

Data analytics platform Alphractal noted that the likelihood of profit-taking risks increases as Bitcoin approaches the $106,000 resistance levels. According to Joao Wedson, CEO of Alphractal, this zone, known as the “Alpha Price” zone, is where long-term holders or whales could take profits. The risk of a "long" squeeze is also elevated, with over $3.4 billion in leveraged long positions at risk of liquidation if prices drop to $100,000. This range could act as a magnet for price, leading to a retest near the psychological level.

The current correction in Bitcoin's price might reflect traders de-risking ahead of the US Consumer Price Index (CPI) release. The CPI data, scheduled for release on May 13, is crucial for Bitcoin traders. Previously, March’s CPI was 2.4%, down from February’s 2.8%, despite a forecast of 2.5%. April’s CPI is forecasted to remain at 2.4%, due to steady energy prices amid balanced oil production and moderating wage growth, easing pressure on price increases.

A lower-than-expected CPI could be bullish for Bitcoin, potentially signaling Federal Reserve rate cuts in 2025, which would boost risk assets like equities and cryptocurrencies. Conversely, a higher-than-expected CPI could be bearish, raising inflation fears and strengthening the dollar, thereby pressuring BTC. If bearish pressure persists on BTC charts even after the CPI print, an immediate key area of interest remains between $100,500 and $99,700, a fair value gap (FVG) on the four-hour chart. Another FVG remains between $98,680 and $97,363, which would represent an 8% correction from the recent highs.