Bitcoin's Next Rally Hinging on Critical Price Level
The cryptocurrency market is keeping a close eye on a significant price level for Bitcoin: the $118,000 mark. This zone, identified by a dense concentration of leveraged long positions on exchanges like Binance, OKX, and Bybit, has the potential to trigger major price volatility.
This critical resistance band, which also serves as a pivot area, was highlighted during a recent flash crash that led to $577 million in liquidations within an hour. The event underscores the fragility and impact of this zone on the market.
Technical analyses suggest that $118,000 is a focal point. Some analysts predict a potential pullback to around $115,000 as buyers accumulate liquidity before another rally, while the volume concentration around this level indicates it's a key level for confirming whether the bullish trend continues toward higher targets like $136,000 or $140,000.
The liquidity and liquidation activity around $118K are not just influenced by on-chain factors. Macro factors such as Fed rate cut expectations and exchange outflows also play a role in shaping broad market sentiment and the sustainability of Bitcoin's advance beyond this level.
Meanwhile, Bitcoin's hovering near $117,000 suggests a reduction in speculative activity on exchanges. At the same time, new and active address counts have risen over the past week, which could provide a longer-term buffer against valuation concerns. This ongoing negative netflow trend signals that investors prefer holding rather than trading, even as prices consolidate.
However, the Network Value to Metcalfe (NVM) ratio dropped sharply by 18.07%, suggesting weakening network valuation despite price growth. This divergence implies Bitcoin may be overvalued from a network fundamentals perspective. The recent pullback in Bitcoin's Funding Rates and NVM ratio highlights cooling speculation and network overvaluation.
Despite these concerns, sustained exchange outflows and rising address activity suggest long-term investor confidence in Bitcoin. The derivatives market has experienced a shift, with Perp Funding Rates falling below 0.1%, indicating a market breather rather than sustained bullish conviction.
Sources: CoinGlass, CryptoQuant.
In the coming days, the balance between leveraged long liquidations and buying pressure at the $118K liquidation zone will shape whether Bitcoin can break out to new highs or face a bearish correction. Traders and analysts will be closely monitoring this level for clues about Bitcoin's potential price trajectory in the near term.
- The crucial resistance at $118,000 for Bitcoin (BTC) on exchanges like Binance, OKX, and Bybit, identified by a concentration of leveraged long positions, has potential to induce major price volatility.
- The current price level of Bitcoin (BTC) hovering near $117,000 indicates a decrease in speculative activity on exchanges, while an increase in new and active address counts offers a potential long-term buffer against valuation concerns.
- As traders and analysts closely monitor the balance between leveraged long liquidations and buying pressure at the $118K liquidation zone, they anticipate that this level will determine whether Bitcoin can make a break for new highs or face a bearish correction in the near term.
