Bitcoin News Today: Bitcoin Consolidates in $115,000-$120,000 Liquidity Trap as Analysts Predict Upside Breakout

Bitcoin’s recent price action has entered a strategic compression phase, with market makers leveraging familiar tactics to trap short-term liquidity and position for a potential upside breakout. Analysts and on-chain data suggest that Bitcoin’s consolidation between $115,000 and $120,000 over the past 10 days reflects a liquidity trap designed to flush out weak long positions while building momentum for a sustained upward move [1]. Market structure indicators, including declining funding rates and a negative Premium metric on Velo Data, confirm reduced bullish sentiment among late buyers, aligning with historical patterns observed before prior short squeezes [1].

Market makers are defending range highs to entice bears into taking short positions, a strategy mirroring tactics used earlier in 2025 before Bitcoin surged to $123,000 [1]. This phase, described by analyst Luca as a “liquidity-building mechanism,” aims to create complacency among bears by temporarily stabilizing price near key resistance levels. Open interest spiked during a recent false breakdown, but subsequent declines indicate short positions are under pressure, signaling a potential squeeze [1].

Technical analysis reinforces the likelihood of an upside breakout. TradingView analysts note that Bitcoin’s current range acts as a “liquidity magnet,” where a deceptive bullish breakout could attract buyers before a pullback, while critical support levels below $120,000 remain pivotal [2]. A flag pattern formed during consolidation further supports the case for an upward move, with momentum signals favoring a continuation above the $120,000 threshold [3]. BBVA analyst Michalis Onisiforou highlights asymmetric risks in the market structure, noting Bitcoin’s proximity to the lower end of its 10-year range and elevated options skew, which favor a bullish bias despite risks of false breakouts [4].

Liquidity dynamics complicate the outlook. On-chain metrics reveal that long-term holders (LTHs) have begun distributing holdings, as evidenced by the chain-driven distribution (CDD) ratio hitting a record high [1]. This behavior often precedes shifts in market sentiment, either through a sustained breakout or a sharp correction. Order book depth and resistance clusters near $120,000 will be critical to monitor, as market makers aim to accumulate liquidity at these levels [1].

Traders are advised to watch for confirmation of a breakout through volume expansion and sustained momentum above key psychological thresholds. While no concrete price targets are provided in the cited analyses, the interplay between technical indicators and on-chain data suggests the market is in a transitional phase, balancing consolidation with the potential for a directional move [1][2][3].

Source: [1] [Bitcoin LTHs Start Distributing: CDD Ratio Hits Historic ...] [https://www.mitrade.com/insights/news/live-news/article-3-985358-20250725]

[2] [Page 2 | Bitcoin Trade Ideas — BITSTAMP:BTCUSD] [https://www.tradingview.com/symbols/BTCUSD/ideas/page-2/?sort=recent]

[3] [Page 18 | BTC / Tether USD on BSC ...] [https://www.tradingview.com/symbols/BTCUSDT_5840B7.USD/ideas/page-18/?asset=base]

[4] [Michalis Onisiforou] [https://www.bbvamarketstrategy.com/author/michalis-onisiforou/]