Bitcoin News Today: Bitcoin faces critical $116k–$118k test amid bullish positioning and Fed cut expectations

Bitcoin's recent market activity has drawn attention to a critical price range of $116,000 to $118,000, with analysts suggesting that how the asset navigates this zone could determine the trajectory of its next major rally. Derivatives data indicates a noticeable shift in sentiment, with perpetual funding rates dropping below 0.1% following a period of aggressive bullish speculation. This decline suggests traders are becoming more cautious, potentially hedging against increased volatility [1]. The cooling of leveraged positions across major platforms like Binance, OKX, and Bybit underscores a broader trend of risk reduction in the short term [1].

Alongside the drop in funding rates, the Network Value to Metcalfe (NVM) ratio has also weakened, falling by 18.07% to 1.95 at the time of reporting. This suggests that despite Bitcoin’s price growth, the network’s valuation is outpacing its user activity, raising concerns about overvaluation from a fundamental perspective [1]. However, recent increases in both new and active addresses indicate continued on-chain engagement, which could serve as a buffer against prolonged bearish pressure.

Investor behavior further highlights the growing confidence in Bitcoin’s long-term value. Spot exchange outflows have remained consistently negative, with $113.32 million in withdrawals recorded on August 8 alone. This trend reflects a preference among holders to store rather than trade, signaling accumulation rather than distribution [1]. The continued red bars on exchange flow charts suggest that more Bitcoin is leaving exchanges than entering, a typical sign of bullish positioning and long-term holding.

The most immediate technical challenge for Bitcoin lies in the $116,000 to $118,000 range, where Binance’s liquidation heatmap reveals dense clusters of leveraged positions. These zones, marked by bright yellow and green on the heatmap, represent areas where aggressive longs are most at risk of being liquidated. A sharp move through this range could either trigger a surge of forced buying or lead to a sudden rejection, depending on the strength of the move [1]. Successfully navigating this resistance would be a critical validation of bullish momentum and could pave the way for a push toward $120,000 and beyond [1].

Analysts are also monitoring broader macroeconomic factors, particularly the growing anticipation of a U.S. Federal Reserve rate cut in September. With nearly 80% of traders on Polymarket pricing in a cut, the expectation of lower borrowing costs is already influencing risk appetite and increasing interest in Bitcoin [1]. This dovish outlook is seen as a potential catalyst for renewed buying interest, especially if it materializes as expected in early August.

Historical patterns further support a bullish case. Bitcoin has shown a tendency to perform well in August, particularly in the year following a halving event. The last halving in 2024 is still not fully reflected in price action, leaving room for continued appreciation. The MVRV ratio, a measure of market health, currently sits within a healthy range of 2.2 to 2.4, indicating that the asset remains undervalued relative to previous bull cycles [1].

Looking ahead, some analysts believe Bitcoin is still in the early stages of a larger bull cycle. While the current price environment has not yet entered the “thrill” or “euphoria” phases—typically seen before major price surges—there is speculation that a rally above $200,000 could occur if the bullish narrative continues to gain momentum [1]. However, such a move would likely mark the peak of the cycle before a potential correction to around $100,000.

Technical patterns also support the possibility of a significant breakout. A bullish flag has formed near $117,335, with some traders interpreting it as a potential signal for a move toward $131,000 [7]. Additionally, wave count analyses suggest the current rally could extend even further, with price projections reaching as high as $160,000 to $175,000 [10].

In conclusion, Bitcoin’s near-term direction appears to hinge on its ability to navigate the $116,000 to $118,000 resistance cluster. A decisive break above this level, especially if accompanied by strong volume and sustained bullish sentiment, could trigger a new wave of upward momentum. Conversely, a rejection could reinforce short-term caution and lead to further consolidation. The interplay of technical, fundamental, and macroeconomic factors suggests that the next few weeks will be critical in determining whether Bitcoin’s current rally is just beginning or nearing a turning point.

Sources:

[1] Bitcoin – How THIS price zone could decide BTC’s next rally (https://ambcrypto.com/bitcoin-how-this-price-zone-could-decide-btcs-next-rally/)

[7] Bitcoin Price Prediction: Traders Say "Fakeout" Is Bullish (https://cryptonews.com/news/bitcoin-price-prediction-traders-say-fakeout-is-bullish-new-all-time-highs-coming-soon/)

[10] Urgent Bitcoin Price Analysis: Craziest Bull Cycle Has Begun (https://www.ccn.com/analysis/crypto/bitcoin-price-reclaims-all-time-high/)