Bitcoin Ends May With 11% Gains, Faces Potential Retest

Bitcoin (BTC) began June with a precarious price action, as traders braced for potential volatility. The highest-ever monthly close for BTC/USD contrasted with increasing speculation of a retest of the $100,000 mark. The latest price volatility has prompted investors across the spectrum to reassess their Bitcoin exposure. Retail investors are just beginning to take notice, while Bitcoin whales are already exhibiting behaviors indicative of a trend reversal.

Bitcoin managed to close the weekly candle just above a critical level from December 2024, which analysts had stated was essential to hold. However, the results were bittersweet, as a bearish divergence was observed on the relative strength index (RSI). This divergence suggests that while the price hit its highest-ever levels, the trend strength indicator showed a lower high, signaling potential weakness. Popular trader Jelle warned of a potential bearish retest, suggesting that Bitcoin could test lower levels unless it reclaims a key support line.

Despite the late comedown, May ultimately sealed 11% gains, marking the highest monthly close ever for BTC/USD. Data from monitoring resource CoinGlass indicates that the majority of order book liquidity lies above the current price, suggesting a potential rebound. Fellow trader CrypNuevo used liquidity data to predict an eventual rebound to $113,000, arguing that the preferred BTC price trajectory would see it move from $100,000 to $113,000.

US unemployment and Federal Reserve policy are under scrutiny as risk-asset traders monitor the strength of the labor market. Recent data hinted at weakness, challenging the Fed’s ability to maintain higher interest rates. The April print of the Personal Consumption Expenditures (PCE) index confirmed slowing inflationary pressure, which could influence the Fed’s policy decisions. Trading firm Mosaic noted that the moderating level of inflation means that the short-term fed funds interest rate is the highest above PCE since heading into the financial crisis in 2008. This could explain why President Donald Trump summoned Fed Chair Jerome Powell to pressure the central bank into cutting rates. However, the latest data from CME Group’s FedWatch Tool shows markets rejecting the possibility of a rate cut before September.

Bitcoin’s roughly 8% comedown from all-time highs has already sparked a shift in investor behavior. While preserving $105,000 at the latest weekly close, BTC investors have not retained the levels of exposure seen during the height of upside in May. Onchain analytics platform CryptoQuant reveals three signs that hodlers have begun to reduce risk, including significant stablecoin outflows from Binance, a decline in long-term holder (LTH) interest, and contrasting accumulation patterns among different wallet cohorts. Binance stablecoin outflows tapped $1 billion at the end of May, potentially reflecting traders’ desire to hedge against risk. At the same time, Bitcoin’s long-term holders (LTHs) saw their realized cap decline through the end of the month, indicating a reduction in accumulation.

A similar scenario is playing out among Bitcoin whales. Entities holding between 1,000 and 10,000 BTC have gradually reduced their exposure as Bitcoin’s price climbed from $81,000 to $110,000, systematically distributing their holdings in a phased manner throughout the rally's progression. Retail holders, having ignored Bitcoin’s comeback until new all-time highs hit, are now diverging from whales by accumulating “at the top.” Research firm Santiment described “clear signs of profit-taking,” noting that high whale activity during market tops can sometimes point to distribution or smart money taking profit. Santiment suggested watching crypto market sentiment cues for hints as to where price might be headed in June, as sentiment has flipped from euphoric to fearful in a matter of days, with price behavior following these emotions with near-perfect timing.

Should the bull market stage a snap comeback, bets are already in over where the next upside target — and local top — may be. Onchain analytics firm Glassnode leveraged hodler profitability to delineate price points at which profit-taking should again pause BTC price upside. For this, it used standard deviation on the market value to realized value (MVRV) ratio. Glassnode explained that the MVRV Ratio compares BTC's market price to the average investor cost basis, helping gauge when investors hold outsized unrealized profits. BTC price action could thus preserve $100,000 as support, contrasting with other downside targets which include a return closer to the $90,000 mark. Glassnode added that while BTC is near overheated territory, it hasn’t yet crossed above the +1σ MVRV band, a level that historically triggers mass profit-taking. Until then, the market may still have room to run before investor gains become ‘too good not to sell.’