Bitcoin Faces Pivotal Resistance as Profit-Taking Ramps Up

Bitcoin’s recent price movement is sending ripples through the crypto market, particularly as it rebounds to around $106,000. However, the prevailing resistance from the $106,000 to $108,000 supply zone raises concerns for investors. This critical range has emerged as a pain point, potentially capping any immediate recovery.

Watchful Eyes on Buyer Momentum

The current market atmosphere suggests that Bitcoin may be experiencing a slowdown in buying momentum. Data from Glassnode highlights a decline in “Momentum Buyers,” indicating that traders are starting to lock in profits rather than increasing their exposure. This trend often signals a local top, complicating bullish sentiment.

Particularly concerning is a notable shift in the Relative Strength Index (RSI), which has dipped to 20 as buying pressure wanes. Conversely, the RSI for those taking profits has surged to 77. Such contrasting signals underline a significant potential for market correction as investors reassess their positions.

Interestingly, 96% of Bitcoin’s supply remains in profit, a statistic that indicates an overheated market. Historical trends suggest that when a high percentage of holders are in profit, corrections are likely to follow, emphasizing the need for vigilance among traders.

Technical Hurdles Ahead for Bitcoin

From a technical perspective, the price rejection from the supply congestion zone between $106,000 and $109,000 has raised alarms. Bitcoin’s past performance illustrates a vulnerability in this range; a similar rejection in January saw the price plummet by 27% to $78,000. Such bearish activity suggests that sellers are firmly defending this zone, making a successful breakout increasingly challenging.

For any meaningful recovery to occur, Bitcoin must decisively close above this resistance level on a daily candlestick. Failure to convert $106,000 into a strong support level could provoke long liquidations, potentially driving the price closer to the psychologically significant $100,000 mark. Market data from CoinGlass shows a significant buildup of sell orders in the 24-hour timeframe, further emphasized by the struggle to maintain upward momentum.

As Bitcoin navigates this complex landscape, the balance between profit-taking and re-entry strategies will dictate its trajectory. Investors should watch closely as the dynamics unfold, with volatility remaining a constant factor.