Bitcoin Faces Volatility as Parabolic Rally Fades, Expert Warns

Bitcoin’s (BTC) ability to sustain a parabolic rally is diminishing, according to a trading expert who analyzed the cryptocurrency's technical indicators. The expert's warning comes as Bitcoin has been holding strong above $108,000, with indicators suggesting a potential parabolic rise ahead. Over 80% of Bitcoin is held by long-term investors, indicating a strong foundation of support for the cryptocurrency.

Bitcoin recently achieved its highest weekly close to date, positioning itself for a reclaim of its final major weekly resistance around $109,000. The cryptocurrency surged above this key barrier and closed the week around the $109,200 mark, successfully confirming its diagonal daily trendline as support. However, the expert noted that the cryptocurrency may be experiencing a “calm before the storm” phase, as it retests the final resistance to confirm the breakout.

The expert, Rekt Capital, affirmed that the goal is to turn this resistance into support, which could push BTC to new all-time highs. He explained that given how the price barely closed above the final weekly resistance, there is little chance for a clean retest of this level into support. The retest is likely to be volatile. Nonetheless, the analyst noted that the cryptocurrency has significant high timeframe support beneath it that should act as a demand area to springboard the price into a Price Discovery Uptrend over time.

Bitcoin has reclaimed and held the high zone of its re-accumulation range, around the $104,400 mark, as support over the past two weeks. Additionally, the $107,244 level emerged as a crucial area after last month’s close, driving BTC back to its retesting phase. The expert considers BTC’s current phase as “the calm before the storm,” adding that for as long as the post-breakout retest continues, Bitcoin will remain positioned for its second Price Discovery Uptrend. However, he pointed out that it is currently locked between $104,400 and $111,000 levels so far this month.

Another analyst, Daan Crypto Trader, warned investors that the upcoming days could be crucial for BTC’s price action this month. He highlighted that Bitcoin has tended to set its monthly high or low within the first 12 days over 80% of the time, before price trends around 20% in the opposite direction. Daan stated that with the slower pace during the summer, BTC could remain within its current range until a real move up begins at the end of Q3 and start of Q4. The trader concluded that the cryptocurrency must officially break out of its range before investors get excited for “much higher later this year.”

Despite the warnings, Bitcoin's bullish rally toward its all-time high of $111,000 has shown signs of exhaustion, with the price losing momentum near this key resistance. The technical setup suggests that there might be a breakout over $110,530, which could start a rally toward the all-time high of $111,980. However, the loss of the $140-$145 support area would represent a warning sign of a possible retest of the psychologically important $100 level.

Institutions continue to buy Bitcoin, yet the price remains relatively stable. This stability could be attributed to the strong foundation of support from long-term investors, who hold over 80% of the cryptocurrency. However, the expert's warning about the fading ability of Bitcoin to mount a parabolic rally suggests that investors should be cautious and prepared for potential volatility in the coming days.

According to the analysis by TradingShot, another major rally could be limited by Bitcoin’s position within a well-defined long-term uptrend that has yet to produce the kind of rallies seen in the past cycles. In a TradingView post on July 9, the analyst noted that since bottoming in November 2022, Bitcoin has traded within an upward channel that closely aligns with a Fibonacci channel guiding price movements since 2013. Despite short-term pullbacks, the overall trend remains intact and is technically targeting a new higher high. Notably, most of this cycle has occurred in the ‘buy zone’ of the Fibonacci channel. Historically, major rallies have followed breakouts from this zone. For instance, in the 2017 and 2021 cycles, such breakouts triggered rapid, exponential moves into the upper Fibonacci bands, delivering significant gains. So far, TradingShot stressed that this cycle has not produced a similar breakout. To this end, Bitcoin recently tested resistance near its all-time high but failed to hold above it.

At the same time, the expert warned that if Bitcoin is to follow its traditional four-year cycle pattern, driven by the supply shock from the halving time, it may be running out of time to deliver a comparable parabolic move before the cycle matures. “So far, we haven’t got such rally on the current Cycle and with time running out (assuming the 4-year Cycle model continues to hold), do you think we will get one this time around?” the analyst said. The analysis suggested potential price targets between $280,000 and $530,000 if Bitcoin can replicate its historical breakout pattern, with key technical indicators aligning with the 50- and 200-week moving averages (MA).