Bitcoin Drops 5% After Hitting $123K All-Time High

Bitcoin's recent price action has been marked by a brief dip after reaching an all-time high of $123,000. This drop was primarily driven by short-term profit-taking, as evidenced by a surge in exchange inflows and a wave of selling from short-term holders. The inflow of over 3,000 BTC into centralized exchanges marked the most aggressive selling since at least April, breaking a multi-week streak of dominant outflows. This abrupt reversal suggests that some short-term holders and a segment of whales viewed the $123K level as a near-term top.

Despite this short-term correction, long-term holders and miners have remained steadfast in their positions. The absence of sustained outflows from long-term holders indicates that the broader bullish structure remains intact. Miners, in particular, have shown restraint, with a notable decline in miner-to-exchange flows and a drop in the Miners’ Position Index into neutral-to-negative territory. This restraint points to confidence in Bitcoin’s continued upside, as miners are not under immediate financial pressure to sell.

Crypto analyst and Coin Bureau founder Nic Puckrin framed the breakout in broader context, saying, “Bitcoin smashed past the $120,000 mark over the weekend, breaking above a seven-year trendline that has acted as a strong resistance level since 2018. This is an incredibly bullish signal, especially given the environment this is happening in.” Puckrin also noted that the Bitcoin long/short ratio is currently overbalanced in favor of the longs, while 24-hour liquidations are close to $1 billion, so a short-term reversal in the price is almost guaranteed, with liquidations looming at around $118,000.

Bitcoin’s drop to $116.8K from the all-time high shows early signs of a short-term correction. The daily RSI has slipped from near-overbought territory, now hovering around 64.8, indicating fading bullish momentum. The MACD still showed a positive crossover, but its upward curve was flattening, suggesting weakening momentum unless fresh buying steps in. The large red candle on the 15th of July confirms heightened sell pressure at the top. While the longer-term trend remains intact, the current setup points to a cooling-off phase, with a possible retest of support levels before bulls attempt to reclaim control.

Puckrin also highlighted how this rally looks different from past peaks. “Unlike previous all-time highs, future funding rates are still at normal levels, meaning the risk of cascading liquidations is low.” He added, “But, most importantly, retail buyers are nowhere to be seen yet. This rally is still driven by institutional capital, while the typical signs of retail involvement – soaring search traffic and crypto app rankings – are absent.”

In summary, while Bitcoin has experienced a brief dip after hitting an all-time high, the broader market sentiment remains bullish. Long-term holders and miners are holding firm, and the absence of retail involvement suggests that the rally is still driven by institutional capital. The current correction is likely a short-term phenomenon, and the longer-term trend remains intact.