Bitcoin Drops 5% After All-Time High, Analysts Warn of Manipulation

Bitcoin's recent price trajectory has been marked by a significant correction after reaching an all-time high of $123,250. The cryptocurrency's price retreated to around $117,284, raising questions about the sustainability of its rapid ascent. This correction was anticipated by technical signals and some analysts, who had sensed a potential reversal. The Material Indicators account warned of a possible manipulation, suggesting that the buy wall at $120,500 might be designed to lure late buyers before a support test. This warning was confirmed as the next strong support was identified at $118,800, with a possible drop to $114,000–115,000 if the pullback intensified.

Traders have expressed caution, with CrypNuevo advising to stay alert for manipulation and potential pump-and-dump patterns. The technical indicators for Bitcoin were mixed. The Relative Strength Index (RSI) stood at 75 on the 4-hour chart, indicating overbought conditions. Conversely, the Average Directional Index (ADX) remained low at 12 on the daily chart, suggesting an immature trend. Joao Wedson from CryptoQuant observed that historically, when the indicator turns green, Bitcoin enters a parabolic rally driven by leverage and fear of missing out (FOMO) on derivatives. However, the decreasing stablecoin reserves on crypto exchanges indicated a liquidity deficit, which could curb market enthusiasm without new inflows. QCP Capital advised selectivity and caution, suggesting that consolidation would be healthy.

The situation remains open, with bullish signals persisting alongside doubts about an imminent consolidation. Bitcoin saw a +10% increase in one week despite the post-ATH correction, and $432 million in short positions were liquidated in 24 hours. The support identified by CoinGlass for a phase of technical pullback was $118,800, and 81% of Myriad users believed Bitcoin would not fall below $100,000 in July. Bitcoin's market capitalization ranked it as the 5th largest global asset at $2.407 trillion. Among the anticipated catalysts was the publication of a key White House report on crypto strategy by July 22 and a still fragile US macro context. The "Big Beautiful Bill" from the Trump administration could inflate the public deficit by $3.3 trillion, historically driving investors toward scarce assets like Bitcoin. However, if the Federal Reserve decides to tighten policy earlier than expected, risk appetite could collapse, along with part of the crypto bubble.

Bitcoin's ascent to $120,000 was driven by various factors, including US-led policies and the influence of Donald Trump, who has become a champion of digital assets. This shift in policy has led to more crypto-friendly regulations and increased institutional participation. Hedge funds, mutual funds, and even retirement funds and sovereign wealth funds are now gaining exposure to Bitcoin through exchange-traded funds (ETFs), adding to the demand for the digital asset. Analysts have projected that Bitcoin could average around $125,000 in the third quarter of 2025, with a trading range between $105,000 and $150,000. Key support and resistance levels have been identified at $108,500 and $130,000, respectively. However, the trajectory to $150,000 is expected to face some bumps, with potential sharp moves and healthy sell-offs along the way.

The Crypto Fear and Greed Index, which measures market sentiment, is currently at 70, indicating a state of "greed." This suggests that a correction to the $105,000 to $110,000 range would not be surprising. Despite this, the rally is underpinned by a crypto-friendly US policy shift and growing emerging market adoption, both of which remain intact. The recent price correction has been confirmed by technical indicators, which show that Bitcoin's price is exhibiting remarkable strength as it continues its parabolic advance beyond the $122,000 range. The cryptocurrency has also shown amazing power, staying over the $119,000 barrier and gaining 2% in the last 24 hours. This demonstrates how rapidly market sentiment can shift to euphoria when the biggest cryptocurrency by market capitalization is involved.