Bitcoin Eyes $123K But Q3 Data Could Stall Price Discovery

Key takeaways:

• Bitcoin targets $122,000, the place $2 billion briefly liquidations are clustered however Q3 seasonal information hints at draw back.

• A falling RSI, spot BTC ETF outflows, and low buying and selling volumes level to weakening bullish momentum.

• FOMC minutes and optimistic information from the White Home might set off a rally on Wednesday.

Bitcoin (BTC) briefly dipped under $117,000 on Tuesday, sweeping the interior liquidity constructed between $117,000 and $119,000 over the weekend. This liquidity absorption, typically a precursor to directional strikes, occurred as $100 million in lengthy positions have been liquidated. Regardless of the dip, the 100-day exponential shifting common (EMA) on the four-hour chart continues to supply dynamic help, limiting draw back threat within the brief time period.

With minimal buy-side liquidity seen till $114,500, the trail of least resistance now stays greater. The subsequent key space of curiosity lies between $120,000–$122,000, an space of sell-side liquidity the place cease orders are clustered. A day by day provide zone between $121,400 and $123,200, representing earlier worth resistance, provides to this confluence, suggesting BTC could try to brush the exterior liquidity established over the previous two weeks.

Reinforcing this bias, BTC liquidation map information reveals that $2 billion in BTC brief positions might be liquidated round $121,600.

Related: Bitcoin price gained 50% the last time its volatility fell this low

Can Bitcoin overcome $122,000?

Whereas short-term market construction outlines a bullish restoration, the long-term setup signifies that BTC’s bullish momentum might be fading. A double prime formation might emerge close to its all-time excessive, reflecting purchaser fatigue. Failure to interrupt cleanly above the $123,200 day by day provide zone would validate this bearish sample, stalling worth discovery.

Onchain information helps this warning. Bitcoin’s day by day relative power index dropped sharply to 51.7 from 74.4, indicating exhaustion on the spot market, whereas day by day volumes fell to $8.6 billion, each indicators of fading participation. Spot BTC exchange-traded fund (ETF) flows additionally declined 80% week-over-week to $496 million from $2.5 billion, pointing to cooling institutional urge for food.

Whereas futures open interest stays elevated at $45.6 billion, rising long-side funding suggests rising overconfidence. Moreover, 96.9% of provide stays in revenue, signaling excessive potential for profit-taking.

August historic returns additional reinforce this stance. With over 60% of the August interval closing within the purple with a median return of two.56%, the upcoming month presents seasonal headwinds. Mixed with weakening onchain exercise, corresponding to falling energetic addresses and switch volumes, BTC could retrace within the coming weeks.

Nevertheless, this outlook might be invalidated on Wednesday. The US White Home is predicted to launch a strategic crypto coverage report, which can introduce a Bitcoin Reserve Framework and delta-neutral accumulation methods, doubtlessly boosting spot ETF flows and BTC treasury constructing.

Moreover, all eyes stay on this week’s Federal Open Market Committee (FOMC) assembly. Whereas no fee reduce is predicted, such an final result might be largely priced in, given July’s constant impartial tone. But, any dovish commentary from Fed Chair Jerome Powell might shift sentiment. If Powell hints at a possible fee reduce in September, markets could front-run the expectation, driving BTC to interrupt above $123,000 and push to new highs.

Related: Bitcoin analysts say this must happen for BTC price to hit new highs

This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer entails threat, and readers ought to conduct their very own analysis when making a choice.