Key insights:
Significant liquidity now gathers between $105,000 and $100,000, indicating market stability.
Over 90% of BTC supply remains in profit, suggesting a leverage-induced sell-off rather than a panic situation.
A reclaim of $117,500 could turn the current correction into a breakout rally.
Bitcoin (BTC) is reportedly entering a “clean-up phase,” with substantial buy orders forming below the $105,000 mark after a major deleveraging event.
Trading resource Material Indicators indicated that order book data reflects “strong sell pressure on BTC,” with limited technical support around $107,000. Although this level may hold temporarily, analysts noted that bid liquidity may not be enough to sustain these prices.
Instead, there are heavier concentrations of buy orders from $105,000 to $100,000. A fall below $105,000 could bring attention back to the yearly open at $93,500 as a longer-term price magnet.
Meanwhile, blockchain analytics firm Glassnode reported that Bitcoin has started to stabilize following its recent drop, staying above the 135-day moving average.
The analytics platform noted that the Young Supply MVRV, which gauges unrealized profits among short-term holders, has “reset toward 1.0.” This indicates that the market has cooled from speculative highs, as newer investors no longer hold large profits, alleviating selling pressure.
Glassnode also noted that the current decline is distinct from previous capitulation occurrences. More than 90% of Bitcoin’s circulating supply is in profit, indicating that the recent losses mainly affected traders who purchased near the peak. In earlier downturns, such as the FTX and Terra Luna incidents, less than 65% of supply was profitable, highlighting broader panic. This time, the correction seems to be driven by leverage, not widespread selling.
Furthermore, Bitcoin analyst Axel Adler Jr. asserted that the market’s reaction during the latest downturn reflects a mature response to volatility. Spot trading volume surged to approximately $44 billion, futures volume hit $128 billion, and open interest dropped by $14 billion, yet only around $1 billion of those positions experienced forced long liquidations.
In essence, Adler believes that about 93% of the deleveraging “wasn’t forced,” suggesting a controlled reduction of leverage, contrasting with a cascading liquidation scenario.
Related: Elon Musk praises Bitcoin as energy-based and inflation-resistant, unlike ‘fake fiat’
Bitcoin bulls target $117,500 rally, but will they succeed?
As the market stabilizes, $117,500 represents a critical resistance zone for bullish continuation. A solid daily close and consolidation above this level could swiftly transform the recent correction into a revitalized rally in the coming week.
However, Bitcoin is likely to move sideways between $110,000 and $100,000 as it seeks to establish a new bottom. The recent low of approximately $101,500, noted on Friday, may be tested again before a clearer range bottom forms above the $100,000 threshold.
On a larger time frame, crypto trader Merlijn observed that Bitcoin is currently retesting the multi-year uptrend established since 2022. Historically, this trendline has proven to be a springboard during each correction of the current cycle.
If it holds again, it would indicate that the broader bull market structure remains intact and that the latest drawdown signifies a mid-cycle reset rather than the onset of a more profound decline.
Related: 3 reasons why a Bitcoin rally to $125K could be delayed
This article does not provide investment advice or recommendations. Every investment and trading action involves risk; readers should perform their own research before making decisions.
