Bitcoin’s Quest for $122,000: Will it Overcome the Hurdle?
The Bitcoin market has been abuzz with excitement as the cryptocurrency aims to reach the $122,000 mark. With a short-term investment of $2 billion, seasonal data in the third quarter could be a significant indicator of its success. However, a falling RSI, Spot-BTC-TF drainage, and low trading volumes suggest that the bullish impulse might be weakening.
Current Market Trends
Bitcoin recently dipped below $117,000 on Tuesday, sweeping the internal liquidity between $117,000 and $119,000. Despite this, the 100-day exponential moving average (EMA) continues to offer dynamic support, limiting the downward risk. The path of least resistance remains higher, with the next significant interest rate area between $120,000 and $122,000, where sell-side liquidity and stopping orders are concentrated.
Liquidation Map and Supply Zone
The Binance BTC/USDT Liquidation Map reinforces this idea, showing that $2 billion in BTC short positions could be liquidated around $121,600. Additionally, a daily supply zone between $121,400 and $123,200, which corresponds to earlier price resistance, adds to the confluence. This suggests that BTC might attempt to sweep the external liquidity defined in the past two weeks.
Long-term Setup and Onchain Data
While the short-term market structure indicates a bullish recovery, the long-term setup suggests that BTC’s bullish dynamics could fade. A double top formation near its all-time high might be created, reflecting buyer fatigue. If the daily supply zone of $123,200 is not exceeded, this bearish pattern could be validated, bringing price discovery to a standstill.
Cautionary Signs
Onchain data supports this cautious outlook. The daily relative strength index of Bitcoin has dropped from 74.4 to 51.7, indicating exhaustion on the spot market. Daily volumes have also fallen to $8.6 billion, a sign of fading participation. Furthermore, Spot BTC ETF flows have cooled down, and the open interest of futures is increasing, which could indicate a growing overhang.
Seasonal Headwinds and Upcoming Events
Historically, August has been a challenging month for Bitcoin, with over 60% of the August periods closing in red. The coming month may show seasonal headwinds, combined with weak exchange activity such as falling active addresses and transmission volumes. However, this outlook could change on Wednesday with the release of the FOMC minutes and a potential strategic crypto guideline report from the White House, which might include a Bitcoin reserve framework and increase spot ETF flows.
Potential Game-Changers
The meeting of the Federal Open Market Committee (FOMC) this week will be closely watched, and a dovish comment from Fed Chairman Jerome Powell could shift market sentiment. If Powell hints at a potential rate cut in September, the markets might meet expectations, and BTC could break through the $123,000 barrier to reach new heights.
As always, it’s essential to remember that every investment and trade movement carries risk, and readers should conduct their own research before making any decisions.
