Bitcoin News Today: Bitcoin's Breakdown: A Bearish Crossroads in the Making

Bitcoin's price has experienced a notable pullback following its record high above $124,000, with analysts and traders closely monitoring its trajectory for signs of a potential reversal. Recent technical indicators and whale activity suggest an elevated risk of further depreciation, with key support levels coming into focus. Analysts such as Captain Faibik highlight that Bitcoin has broken below a rising wedge pattern that had been forming since April, a bearish reversal signal that typically precedes sharp declines. According to this analysis, a test of the $110,000–$112,000 support zone is expected, with a potential further decline toward $105,000–$108,000 if that initial level is breached [1].

The breakdown from the rising wedge suggests a potential drop as low as $88,000 if the pattern plays out as expected. This calculation is derived by measuring the height of the wedge and subtracting it from the breakdown point. However, this bearish scenario could be invalidated if Bitcoin manages to hold above its 50-day exponential moving average (50-day EMA), a historically strong support zone during the asset's recent bullish trend [1]. Conversely, a successful rebound could lead to a retest of the wedge’s upper trendline at around $125,000 by September.

In addition to the rising wedge breakdown, analysts have noted the formation of a potential double top pattern, similar to the one observed in 2021, which could further support the possibility of a deeper correction. In the 2021 scenario, a double top preceded a 77% correction in Bitcoin’s price. If the pattern holds this time, Bitcoin could face a drop toward the $94,750 level by September. This bears relevance to the current market dynamics and adds a layer of complexity to the technical analysis of Bitcoin’s price action [1].

On-chain metrics have further raised concerns about Bitcoin’s potential for further declines. Whale activity, particularly among mega-whales holding over 10,000 BTC, has shown a sustained negative trend since mid-July, as reported by data provider Glassnode. This decline in whale holdings suggests profit-taking near Bitcoin’s recent highs and could indicate broader selling pressure. Combined with the weakening technicals from the rising wedge breakdown, this whale-driven selling pressure increases the risk of a broader pullback unless strong spot demand returns [1].

Despite these bearish signals, there are factors that could offset some of the downside risks. The Federal Reserve’s anticipated rate cut in September, according to CME data, may provide a counterbalance to the current technical weakness. Unlike the 2021 Bitcoin peak, which coincided with the onset of Fed tapering and quantitative tightening, the current environment includes a growing global money supply (M2) and the potential for a 25-basis-point rate cut. These macroeconomic conditions could support a broader uptrend in Bitcoin’s price, potentially pushing it toward a $132,000 target in the coming months [1].

Bitcoin’s recent price movements reflect broader market stress, particularly from profit-taking, leverage unwinding, and uncertainty surrounding Federal Reserve policy. The crypto market has experienced massive liquidations totaling over $1 billion, with 95% of the losses attributed to long positions—bets that prices would rise—highlighting overleveraged exposure. This cascade of liquidations has pushed prices further down, particularly in Ethereum, which saw $170 million in liquidations [2]. The market’s overleveraged positions and profit-taking have created a self-reinforcing cycle of selling, compounding the downward pressure on Bitcoin.

Bitcoin's MVRV (Market Value to Realized Value) ratio is currently at 21%, indicating that most holders are in profit territory. This has led to increased selling pressure as investors look to lock in gains after reaching record highs. According to Santiment, this places Bitcoin in a “mild danger zone,” where investors may consider taking profits as uncertainty grows. Glassnode data also notes that Bitcoin has completed its third major wave of profit-taking in the current bull cycle, a pattern that historically precedes periods of consolidation or further price action [2].

The Federal Reserve’s policy uncertainty has added another layer of volatility to Bitcoin’s price. Inflation data has been mixed, and employment figures remain resilient, complicating expectations for rate cuts. Polymarket data shows that the odds of no rate cut in September have increased from 12% to 26% within a short timeframe. This recalibration has led to increased market caution, particularly as lower interest rates typically make risk assets like Bitcoin more attractive. The absence of aggressive rate cut expectations removes a key pillar of support for Bitcoin’s recent rally [2].

Technical analysis, however, still shows upside potential for Bitcoin if key support levels hold. While the price has crossed the trendline drawn since mid-April, the 50 EMA remains intact as a critical support level. Analysts have noted that an immediate support zone exists around $112,000, reinforced by the 23.6% Fibonacci retracement. Prices above this level could offer a buying opportunity, potentially leading to a retest of resistance at $120,000 and $124,000. However, a drop below the 200 EMA, which is positioned near $103,000, could shift the market’s outlook toward a bearish scenario [2].

Market breadth data also reveals deeper concerns within the broader crypto ecosystem. While 63 of the top 100 cryptocurrencies trade above their 200-day moving averages—indicating a bullish long-term trend—exactly 50% of these now trade below their 50-day averages. This suggests that short-term weakness is spreading across the market. The Nasdaq shows a similar profile, with 61 stocks above their 200-day averages and 49 below their 50-day averages. This parallel movement indicates that crypto is not facing unique challenges but rather participating in broader market caution [2].

The future of Bitcoin’s price remains uncertain, with several key factors poised to influence its trajectory in the coming months. Analysts and institutional players continue to monitor whether the Fed’s Jackson Hole speech will offer clarity on the policy path. Additionally, the extent of leverage that remains in the system and the willingness of institutional buyers to absorb selling pressure will play a critical role in determining the next phase of Bitcoin’s price movement. While the current correction appears to be a healthy part of the market cycle, the outcome will depend on how these factors evolve in the short to medium term [2].

Source:

[1] Bitcoin Price Rising Wedge Breakdown: How Low Can ... (https://cointelegraph.com/news/btc-price-rising-wedge-breakdown-how-low-can-bitcoin-go)

[2] Bitcoin Price Is Going Down as Market Stress Tests Bulls ... (https://www.financemagnates.com/trending/bitcoin-price-is-going-down-as-market-stress-tests-bulls-before-jackson-hole)