Bitcoin Faces 8% Pullback Risk as Momentum Indicators Turn Bearish

Bitcoin's recent bull run has shown signs of slowing down, with technical indicators suggesting a potential price pullback. The leading cryptocurrency by market value was trading near $108,000 at the time of reporting, testing the bullish trendline that characterized its sharp rise from $75,000 to record highs over $110,000. Despite reports that the Trump family media company plans to raise $3 billion to buy cryptocurrencies such as bitcoin, there has been little bullish action in the past 24 hours.

A key momentum indicator, the 30-day rate of change (ROC), which measures the percentage increase or decrease in bitcoin's price over the past month, has shown a "bearish divergence." This pattern occurs when an asset's price rises, but momentum indicators like the 30-day ROC fail to confirm the same, hinting at potential weakness and price correction. Although bitcoin remains within a bullish upward channel, the 30-day ROC is forming lower highs, signaling a bearish divergence and weakening momentum. Additionally, the daily chart moving average convergence divergence (MACD) histogram, an indicator widely used to gauge trend strength and changes, has flipped negative, indicating a bearish shift in momentum.

All this means that BTC could dive out of the bullish ascending channel, potentially revisiting the major psychological resistance-turned-support at $100,000. The broader outlook remains constructive, consistent with the recent golden cross of the 50- and 200-day simple moving averages (SMAs).

Bitcoin is currently facing a potential pullback to $100,000 as momentum indicators show bearish divergence. The Trend Analysis TEMA (34) suggests that if the price remains below this indicator, it reinforces bearish momentum. The current price being below the TEMA indicates a need for caution among investors. This bearish signal is further supported by the Relative Strength Index (RSI) cooling to 61.87 from previous highs, indicating mild bullish control but not strong enough to confirm a breakout. The market's reaction to heavy staking activity has remained subdued, with investors interpreting this as a quiet confidence building beneath the surface. However, broader market signals must align before a strong trend emerges.

The dominance of long liquidations and persistent outflows point to near-term fragility in the market. On the 25th of May, long liquidations reached $6.1 million across major exchanges, dwarfing just $326K in short liquidations. This imbalance reflects the market punishing overleveraged bullish traders amid recent downside price action. Binance alone accounted for $2.76 million in long liquidations, reinforcing the dominance of sell-side momentum. Historically, such liquidation skews often signal a cooling market or potential reversal. Therefore, this could either mark the end of excessive long speculation or hint at deeper bearish pressure building up.

Despite the shakeout, 68.95% of traders held long positions in Bitcoin, showing that most retail traders remain optimistic, even after a heavy liquidation wave. However, such lopsided sentiment often precedes further volatility or shakeouts. If Bitcoin continues its sideways movement or drops lower, these long positions could once again face liquidation pressure. It also suggests a disconnect between trader expectations and actual price momentum. Therefore, despite bullish sentiment, the market still holds significant risk for upside chasers.

The data emphasizes caution, especially for those still heavily positioned on the long side. Unless Bitcoin flips the $193 resistance with strong momentum and inflows improve, upside potential remains capped. Traders should prepare for more consolidation or downside if leveraged bulls continue getting wiped out. The market's reaction to heavy staking activity has remained subdued, with investors interpreting this as a quiet confidence building beneath the surface. However, broader market signals must align before a strong trend emerges.