Bitcoin falls 7% from ATH – Is $110K BTC’s next key test?
Key takeaways
BTC uptrend momentum has flipped to consolidation, and rising profit-taking might drag it to $110K or $105K. What’s subsequent?
Bitcoin [BTC] has dropped about 4% this week, stretching its pullback from the all-time excessive (ATH) of $123K to $114K – A 7% retracement.
Total, the bullish uptrend in July has now shifted to a consolidation mode, famous famend BTC analyst Willy Woo.
He added that the asset might stay range-bound earlier than trying one other breakout.
“Elevated hypothesis and profit-taking are dragging on momentum, signaling that BTC might have a reset or sideways grind earlier than the subsequent breakout try.”
Supply: Swissblock
The connected chart confirmed excessive hypothesis (crimson) whereas profitability (SOPR, inexperienced) was elevated however steadily retreated as holders booked earnings.
Moreover, momentum flipped adverse, underscoring short-term warning.
Revenue-taking meets elevated hedging
Swissblock additional painted the colour of the present profit-taking, which surged to almost $3 billion per day on common in July.
This bolstered the same sell-off that marked the earlier native worth peak.
Supply: Swissblock
Nonetheless, the crypto analytics agency famous that the extent of present sell-offs was nonetheless not as intense because the late 2024, which hit over $4.5 billion.
As such, this might be only a tactical cool-off, with an August breakout nonetheless on the playing cards, added Swissblock.
“Promoting strain is seen, however not excessive—suppose cooling, not capitulation…If macro/on-chain stays steady, a breakout reset is feasible in August.”
This was barely opposite to different market cycle high expectations by October amid rising macro uncertainty.
Even so, the current dump was marked by a rise in demand for short-dated name choices (bullish bets), particularly for 1-week (blue), 1-month (purple), and 3-month (inexperienced) tenors.
This was proven by the BTC 25 delta skew, which jumped 4% to six% throughout the above tenors, underscoring a short-term bullish sentiment or brief protecting.
Supply: Velo
In different phrases, Choices merchants anticipated a pointy rebound within the brief time period or hedged closely to cowl such a possible upside transfer.
On the identical time, Deribit data confirmed that $105K put choices had been essentially the most traded quantity for the eighth and twenty second August expiries.
This meant that there was additionally heavy hedging for draw back threat to $105K and $110K, for the subsequent two weeks.
Supply: Deribit
There was a surge in demand for calls eyeing $120K and $125K by the tip of August.
However the demand on the spot market has dropped and flashed crimson for the primary time since Might, in line with the Coinbase Premium Index (CPI).
This advised that demand from U.S traders has eased up to now two weeks. A robust rebound on this metric might affirm a possible try for a breakout.
Supply: CryptoQuant
Total, BTC uptrend momentum has shifted amid a hunch in spot demand and rising sell-off.
Whereas short-term appeared tactically bullish, Choices merchants ready for a possible dip to $105K and $110K.
