Bitcoin Hits $118,393 High But Faces Correction Risks

Bitcoin's price reached a new local high of approximately $118,393 earlier today, aligning with a key Fibonacci resistance level. This milestone has sparked celebrations among bullish investors. However, several on-chain and chart-based indicators suggest that this upward momentum may not be sustainable.

The Bitcoin price is exhibiting signs of short-term weakness, which could lead to a correction if the current momentum fades. One of the key indicators is the Spent Output Profit Ratio (SOPR), which tracks whether Bitcoin holders are selling their coins at a profit or a loss. When the SOPR is above 1, it indicates that sellers are primarily locking in profits. Currently, the SOPR is spiking, suggesting that wallets that bought BTC earlier are now selling at higher prices. Historically, a rapid increase in SOPR has often marked a local top, not necessarily the end of the trend, but a cooling-off period as traders take profits.

In May, a similar spike in SOPR preceded a significant drop in Bitcoin's price by several thousand dollars. While this does not guarantee a crash, it signals that fewer people are holding with conviction in the short term. Another indicator of potential weakness is the massive $200 million liquidation of short positions on Bybit, which occurred within just five minutes. This forced closure happens when too many traders bet that BTC will fall, but the price rises rapidly, triggering a "short squeeze." While such squeezes can temporarily boost the Bitcoin price, they often end in exhaustion. In this case, the BTC price surged to $118,393 but stalled at that resistance level and began to pull back, forming a classic liquidation wick—a short-term spike followed by hesitation.

Adding to the mix, well-known trader James Wynn opened a 40x short on BTC near $111K. High-leverage shorts are risky, and while Wynn’s trade may already be liquidated, it reflects a broader sentiment that traders still expect Bitcoin to correct, despite repeated all-time high pushes. When the market leans heavily short, rallies can be sharp but also fragile. A rally driven by short liquidations rather than organic demand often lacks staying power. Additionally, there have been selloff vibes in the air, further contributing to the cautious sentiment.

Looking at the chart, Fibonacci levels from $98,656 to $118,393 show that BTC has just hit the upper resistance. The concern is that below this level, there are no strong support zones. Specifically, between $113,735 and $108,524, there is very little past trading activity. This means that if the Bitcoin price starts to drop, it could fall quickly, with large red candles and little resistance to slow it down. In trading, this is often called “thin air”: price zones where buyers haven’t historically stepped in. It doesn’t guarantee a fall, but it means the downside risk is steeper if momentum reverses.

The Bitcoin price is still in an uptrend, but several signs are flashing caution. The SOPR shows increased profit-taking, the Bybit liquidation indicates high short positioning, and the Fibonacci levels reveal weak support just below current levels. If BTC fails to hold $113,735, a drop to $108,524 could happen quickly. For now, traders should keep an eye on these levels and be ready for the next wave of liquidations.