Quickly understand the history and background of various well-known coins

Bitcoin Drops 3% Amid Profit-Taking Fears Near $106,000 Resistance

Coin WorldMonday, May 12, 2025 9:26 pm ET

1min read

Bitcoin's recent price movements have sparked discussions among analysts and traders about potential profit-taking and the risks associated with a long squeeze. The cryptocurrency reached an intraday high of $105,800 on May 12, but experienced a 3% dip to $101,400 during the trading session. This price action is significant as it indicates a bearish breakout from an ascending channel pattern, which could lead to profit-taking near the $106,000 resistance level.

Data analytics platform Alphractal noted that Bitcoin's approach to the $106,000 resistance level increases the likelihood of profit-taking risks. Joao Wedson, CEO of Alphractal, highlighted that this zone, known as the "Alpha Price" zone, is where long-term holders or whales could take profits. This scenario is concerning because it could lead to a significant price drop if these large investors decide to sell their holdings.

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 potential for a long squeeze adds to the bearish sentiment, as it could trigger a cascade of liquidations, further driving down the price of Bitcoin.

The upcoming US Consumer Price Index (CPI) release is another factor that could influence Bitcoin's price. A lower-than-expected CPI could be bullish for Bitcoin, potentially signaling Federal Reserve rate cuts in 2025 and boosting risk assets like equities and cryptocurrencies. Conversely, a higher-than-expected CPI could be bearish, raising inflation fears and strengthening the dollar, which would put pressure on Bitcoin.

If bearish pressure persists on Bitcoin 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. These levels are crucial as they could act as support or resistance, depending on the market's reaction to the CPI data.

In summary, Bitcoin's approach to the $106,000 resistance level presents significant risks, including potential profit-taking by whales and the possibility of a long squeeze. The upcoming CPI data release adds another layer of uncertainty, as it could either boost or dampen Bitcoin's price. Traders and investors should closely monitor these developments and be prepared for potential volatility in the market.

Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.