Key Points:
Analysts suggest that the BTC price may drop to the $118,000-$120,000 range before resuming an upward trend.
BTC futures open interest has decreased by $4.1 billion from its peak, which may indicate a "healthy" reset.
BTC has fallen 3.7% from its historical high of $126,000 and may return to the $118,000 level in the coming days, but data shows that trading below this level for an extended period may not last long.
According to data from Cointelegraph Markets Pro and TradingView, BTC was trading at $121,300 on Friday, experiencing a mild pullback in the past 24 hours.
While the macro setup remains bullish, analysts unanimously agree that the BTC/USD pair may first drop towards $118,000-$120,000 before resuming an upward trend.
Analyst Stockmoney Lizards noted, "This is what we call a shakeout on both sides." He added that such price movements are normal after BTC sets a new all-time high.
"This pullback should end soon, around $118,000-$119,000, and then move higher," the analyst further stated.
Another analyst, Ted Pillows, mentioned in a post on the X platform on Friday, "It looks like $BTC wants to retest the $118,000-$120,000 support level."
The analyst pointed out that there are strong buy orders at this level, indicating that the BTC/USD pair may pull back to this level.
Meanwhile, Glassnode's cost basis distribution heatmap shows support around $117,000, where approximately 190,000 BTC were last purchased at that price.
Michael van de Poppe, founder of MN Capital, holds a different view, believing that BTC has completed its pullback after a flash drop to $119,700 during Thursday's New York trading session.
Similarly, AlphaBTC stated that the price has now cleared downside liquidity all the way to $118,000, with traders currently focusing on liquidity above $126,000.
According to data from CoinGlass, as BTC's price fell from $126,000 to $119,700, BTC futures open interest (OI) decreased by $4.1 billion.
This can be seen as a healthy market reset, as it reflects the liquidation of overly leveraged positions, alleviating excessive optimism in the market.
On-chain data provider Glassnode stated that although open interest has slightly decreased from historical highs, "due to both bulls and bears being affected by severe price fluctuations, open interest remains high," adding:
High open interest typically indicates excessive leveraged trading, which can amplify volatility. When a slight price drop triggers a large number of liquidations, it clears speculative positions, thereby stabilizing the market.
Related: Analysis shows: Bitcoin (BTC) has 100 days left until a "surge market," or the bull market may end.
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original: “Bitcoin (BTC) may drop to $118,000, but futures reset means dip won't last long”
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