Bitcoin Drops 5.65% After Record High Near $123,250

Bitcoin has confirmed an inverted head-and-shoulders breakout, signaling an extended upside move toward $160,000. This pattern, recognized as one of the most reliable reversal patterns, has appeared on the 3-day and weekly BTC/USD charts. The recent breakout above neckline resistance near $113,000 confirms the structure and opens the door for a measured move toward at least $140,000, according to chartist Merlijn the Trader. Meanwhile, popular analyst Trader Tardigrade sees even more upside, anticipating the BTC price to reach the reversal setup’s measured target around $160,000.

Bitcoin is cooling off after hitting a record high near $123,250, slipping about 5.65% in a likely overbought correction. The pullback follows days of strong gains, with BTC’s daily relative strength index (RSI) recently crossing 70, signaling short-term upside exhaustion among traders. On-chain data also suggests profit-taking played a role, as large holders, including both long-term investors and short-term speculators, have been locking in gains, adding to the downside pressure.

Analyst Hardy suggests that Bitcoin may revisit the CME gap between $114,300 and $115,600 to confirm it as new support before pushing higher. This region nearly aligns with the neckline of the IH&S pattern. It is relatively common for price to return to the breakout zone—previous resistance turned support—before resuming its trend. Such behavior often helps flush out weak hands and build a stronger foundation for continuation. A successful bounce from the neckline zone would likely strengthen Bitcoin's rally case toward the $140,000-160,000 target by August or September.

Despite trading near all-time highs, Bitcoin's MVRV Z-Score remains far below levels historically associated with market tops. The MVRV Z-Score measures how far Bitcoin’s market value deviates from its realized value, a proxy for the capital actually invested into the network. Historically, when market value vastly exceeds realized value, the score enters the red zone, signaling overvaluation and often preceding major tops. This indicates that, from an on-chain perspective, Bitcoin is not yet overheated and may continue climbing before entering a classic top formation, potentially hitting the IH&S’s $160,000 price target by August or September.