Bitcoin Hovers Above $108,000: Analysts Warn of Potential Price Drop
Bitcoin (BTC) is currently maintaining its position above the crucial $108,000 support level. However, analysts at Bitunix are cautioning traders about a possible price collapse, citing the risk of a liquidity sweep below this level following significant liquidations in BTC derivatives markets last week.
Three Reasons Bitcoin Traders Should Be Wary of a Drop Below $108,000
Bitcoin briefly closed below the $108,000 support level last Saturday but has consistently closed above it since. Data from CoinGlass reveals that over $158 million in long positions were liquidated last Friday.
“Short-term focus should be on how the $108,500–$109,000 support holds, and chasing higher prices is not advised. We recommend observing whether the $110,800–$112,000 pressure band is effectively broken before considering further positions. A drop below $108,000 could trigger another round of liquidations. Traders are advised to exercise strict risk control, as the market could weaken again if capital inflows do not resume.”
Institutional capital flows into Bitcoin have slowed in recent weeks. Data indicates a deceleration in capital inflow to spot Bitcoin ETFs since May 22.
While some corporations are adding Bitcoin to their treasuries, institutional capital flows into spot Bitcoin ETFs, often seen as a measure of institutional interest, are decreasing.
Bitcoin has spent the past week consolidating just below its all-time high, trading around $109,000. Powerful forces are pulling the market in different directions. Institutional investors continue to allocate funds to Bitcoin ETFs and corporate treasuries. However, geopolitical tensions and political uncertainty are creating background noise, making some investors cautious. Aggressive buying on price dips suggests major players remain confident in Bitcoin’s long-term value.
The Trump administration continues to signal strong support for Bitcoin. Trump’s media company plans to raise $2.5 billion to build a corporate Bitcoin treasury, highlighting the mainstream acceptance of Bitcoin.
On-Chain Indicator Suggests Bitcoin’s Cycle Peak Is Far Off
The Bitcoin Net Realized Profit/Loss indicator shows that positive readings correspond to investors taking profits on their Bitcoin holdings. Historically, larger profit-taking peaks align with the final phase of Bitcoin’s market cycle.
The current metric shows small positive spikes, indicating that traders are realizing gains, but at a relatively low volume compared to previous cycle peaks in 2018, 2021, and 2022.
Could Bitcoin Retest Its All-Time High?
Bitcoin is currently trading less than 3% below its all-time high. A daily candle close above this level could pave the way toward the 127.2% Fibonacci retracement level, measured from the April 7 low of $74,508 to the all-time high of $111,980.
BTC would need a 12% rally to reach the 127.2% Fibonacci projection at $122,172. On the downside, $108,000 remains a key support level for Bitcoin. The fair value gap between $97,732 and $102,315 is another significant support zone on the daily price chart.
The Moving Average Convergence Divergence (MACD) indicator shows underlying negative momentum in Bitcoin’s price trend, while the Relative Strength Index (RSI) reads at 65, trending upward.
Data indicates that over 98% of wallet addresses holding Bitcoin are currently in profit, as BTC trades above $108,000.
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