Is Bitcoin putting in a top?
Bitcoin’s 7% pullback after record highs has raised questions over whether the cryptocurrency is topping out or simply consolidating. While profit-taking, slightly weaker Fed rate-cut hopes, and technical pressures weigh on the short-term outlook, analysts are eyeing critical support around $112,000 to gauge if the recent dip is a pause before another leg higher or the start of a deeper correction.
Is Bitcoin topping out or just consolidating?
Bitcoin's stumble appears to be a natural pullback after a strong rally, amplified by macroeconomic headwinds and technical unwinding.
If inflation data points toward a more dovish Federal Reserve (Fed) or if institutional demand resurfaces, Bitcoin could regain momentum. Conversely, further hawkish signals or large position liquidations could extend the slide.
Bitcoin has fallen by around 7% over the past week as profit-taking after record highs, reduced optimism for aggressive Fed rate cuts, and over $1 billion in leveraged liquidations pressured the crypto currency.
Additional weakness came from exchange-traded fund (ETF) outflows and broader macroeconomic uncertainty following last week’s unexpectedly sharp increase in the US Producer Price Index (PPI).
The majority of analysts view the recent drop as a consolidation phase rather than the start of a deeper downturn but technical analysts look at key technical support levels to gauge what may happen next.
Bitcoin bearish setup
Monday’s fall through the April-to-August uptrend line at $117,104 turned the short-term technical tone negative.
The area around the 55-day simple moving average (SMA) at $115,149.85 currently acts as support but a daily chart close below it would probably open the door to the key $111,982.45–$111,965.80 support band (May peak to early-August low).
Additional support sits at the June peak near $110,617.03.
Bullish setup
If price steadies above or around the $111,982.45-to-$111,965.80 support area, another leg up could target the mid/late-July highs at $119,815.35-to-$121,012.09, now likely to act as a resistance zone.
Beyond that, the July peak at $123,181.77 and the current August record at $124,277.50 come back into view.
Daily Bitcoin candlestick chart
Short-term outlook
Technically speaking Bitcoin is expected to remain under pressure while it trades below the 17 August high $118,624.45 on a daily chart closing basis, with its focus remaining on the $111,982.45-to-$111,965.80 support region.
The medium-term view is toppish since two failures around the 161.8% Fibonacci extension around $122,000 plus last week’s false breakout to record highs, alongside negative daily Relative Strength Index (RSI) divergence, point to a possible retest of $111,982.45-to-$111,965.80 support region. A daily close beneath that zone would put the 200-day simple moving average (SMA) at $100,431.15 on the radar.
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