The price of Bitcoin, the first cryptocurrency, is stuck in a range between support at $116,000 and resistance around $120,000. The Ethereum rate is also losing momentum as it approaches the psychological mark of $4,000. This was reported by analysts at QCP Capital.
In their opinion, in the medium term there remains a high probability of reaching new all-time highs. This is facilitated by institutional capital inflows and positive changes in regulation.
Analysts noted that companies like SharpLink Gaming continue to raise funds to buy Bitcoin and Ethereum, indicating long-term confidence in these assets.
Total daily net inflows into the ETH ETF are $218.64 million.
However, in the short term, experts urge caution. The market reacts weakly to positive news, including the adoption of crypto-friendly legislation in the US and progress in the ETF space. The lack of growth on the back of good news often signals market exhaustion and is classic late-cycle behavior, the experts emphasized.
Threat from the dollar
Analysts associate the main macroeconomic risk with the US dollar. Most traders are betting on its weakening by opening short positions. According to the CFTC, the number of such positions has reached extreme values.
This situation leaves the market vulnerable to a short squeeze. If the dollar exchange rate starts to rise, traders will be forced to close unprofitable trades en masse. This could trigger a move away from risky assets, including cryptocurrencies, analysts explained.
The focus will be on U.S. inflation and employment data in the coming days, which will determine the market's development in the third quarter. At the July meeting, Fed analysts expect the key rate to remain unchanged. The regulator will most likely emphasize that its decisions depend on incoming data. The September meeting will be key, as the chances of a rate cut remain balanced.
The majority (97.5%) of market participants expect the indicator to remain at the same level following the meeting on July 30.
Bitcoin Falls to $110,000
Glassnode analysts have indicated a possible correction in Bitcoin to the $110,000 level to test key support. The reason could be a "price gap" without significant trading volume at this level.
Experts explained that as the price rose rapidly from $110,000 to $115,000, investors had little time to buy, creating an area without strong support based on the asset purchase price.
“There remains an air pocket of volume between $115,000 and $110,000 below the current spot price. This is the result of the price moving through the range without any room for transactions,” the report said.
Glassnode believes the market may test this zone in search of support. Although such gaps are not always filled, they create a "pull" for the price.
Analysts used the cost basis of short-term holders to identify potential support levels, which also help identify prices at which investors might begin to take profits.
Using standard deviation, Glassnode predicted a possible local maximum of around $140,000 if growth resumes.
“If the market breaks higher, $141,000 is likely to be the next major resistance area where selling pressure could quickly intensify,” the firm concluded.
