Bitcoin News Today: Bitcoin’s Compression Phase: A Prelude to Breakout or Collapse?

Bitcoin has recently reclaimed the $110,000 price level after a brief dip below the critical support zone, sparking renewed discussions on the asset's short-term trajectory. Despite the apparent rebound, market analysts remain cautious, noting that the BTC price remains fragile, with on-chain data indicating the onset of a compression phase within the Bitcoin cycle. This phase, characterized by lower volatility and subdued trading volumes, historically signals the groundwork for a potential breakout—either bullish or bearish—suggesting a period of consolidation before the next major price move [1].

The Adjusted Bitcoin Cycle Extremes Index, a composite metric integrating several key on-chain indicators such as SOPR, MVRV, NUPL, and NVT, currently reads at 8.8%, indicating a market in a bottom zone close to compression [1]. This reading suggests that the Bitcoin network is entering a phase that historically has preceded expansion periods marked by heightened volatility and directional price swings. Analysts remain divided, with some viewing this compression as the closing chapter of a bull cycle that began in 2023 and delivered over 600% gains, while others see it as a prelude to another leg higher, driven by institutional interest and whale accumulation [1].

Market structure analysis reveals that Bitcoin is currently under pressure, with key technical levels determining the direction of the next move. The 50-day Simple Moving Average (SMA) is beginning to slope downward, while the 100-day SMA is positioned near $111,700, acting as a resistance level [1]. Bulls need to reclaim this range to shift momentum, but without robust buying support, the price could retreat toward the 200-day SMA around $101,300, a major support zone. The daily RSI has also entered oversold territory, highlighting weak conviction among traders, while open interest in futures contracts and funding rates continue to decline [2].

Futures and options markets reinforce a cautious stance, with open interest falling and volatility spreads narrowing. However, the 25-delta skew has risen above historical extremes, indicating heightened demand for downside protection [2]. This defensive positioning reflects growing uncertainty among traders, who are increasingly hedging against further price corrections. Meanwhile, ETF inflows have provided a temporary buffer, though volumes remain subdued, and institutional interest has become more selective amid recent price fluctuations [2].

Despite the fragile on-chain and futures environment, some analysts argue that current corrections represent opportunities for accumulation within a broader uptrend. Institutional demand, as evidenced by the Coinbase Premium Gap of +11.6, suggests that US institutions are willing to pay a premium for Bitcoin exposure—a trend historically linked to extended bullish phases [3]. Additionally, the Delta Cap metric, currently at $739.4 billion, indicates that Bitcoin remains above a critical long-term valuation floor, with strong capital inflows and renewed investor conviction despite recent short-term volatility [3].

Overall, the BTC market remains in a make-or-break phase, with key levels around $109,000 serving as a critical battleground between bulls and bears. Without significant buying pressure, the risk of further downward momentum persists, especially if broader macroeconomic conditions or digital asset market sentiment shift. While short-term stability appears possible, the broader structural setup continues to reflect cautious positioning, with downside risks looming until stronger demand reemerges [2].

Source: [1] Bitcoin Cycle Extremes Index Hits 8.8%: Compression ... (https://www.mitrade.com/insights/news/live-news/article-3-1085498-20250901) [2] Bitcoin (BTC) Faces Fragility Amid Market Volatility and ... (https://blockchain.news/news/bitcoin-btc-faces-fragility-amid-market-volatility) [3] Red August, Green Signals: Why Bitcoin's Structure ... (https://cryptopotato.com/red-august-green-signals-why-bitcoins-structure-remains-unshaken/)