Key Points:
Bitcoin's target is $122,000, with $2 billion in short liquidations concentrated here, but seasonal data for Q3 suggests downside risks.
The RSI is declining, spot BTC ETF outflows and low trading volume indicate weakening bullish momentum.
The FOMC meeting minutes and positive news from the White House may trigger a rebound on Wednesday.
Bitcoin (BTC) briefly fell below $117,000 on Tuesday, clearing the market's internal liquidity accumulated over the weekend between $117,000 and $119,000. This round of liquidity absorption typically signals potential trend fluctuations, during which long positions totaling $100 million were liquidated. Despite the short-term pullback, the 100-period Exponential Moving Average (EMA) on the four-hour chart continues to provide dynamic support, limiting short-term downside risks.
With limited visible buyer liquidity before $114,500, the path of least resistance remains upward. The next key area of focus is between $120,000 and $122,000, which is a seller liquidity zone where stop-loss orders are concentrated. The daily supply zone between $121,400 and $123,200 represents previous price resistance, increasing this confluence, indicating that BTC may attempt to clear the external liquidity established over the past two weeks.
Supporting this bias, BTC liquidation map data shows that $2 billion in BTC short positions may be liquidated around $121,600.
While the short-term market structure depicts a bullish recovery, long-term setups suggest that BTC's bullish momentum may be waning. A double top pattern may emerge near its historical high, reflecting buyer fatigue. Failure to clearly break through the daily supply zone at $123,200 would validate this bearish pattern, hindering price discovery.
On-chain data supports this cautious stance. Bitcoin's daily Relative Strength Index (RSI) has sharply dropped from 74.4 to 51.7, indicating exhaustion in the spot market, while daily trading volume has decreased to $8.6 billion, showing a decline in participation. Spot BTC exchange-traded fund (ETF) flows have also dropped 80% from $2.5 billion to $496 million, indicating cooling institutional demand.
Although open interest in futures remains high at $45.6 billion, the increase in long funding suggests overconfidence. Additionally, 96.9% of the supply is in profit, indicating a high potential for profit-taking.
Historical returns for August further reinforce this position. Over 60% of the period in August closed with an average return of 2.56%, presenting seasonal headwinds for the following month. Combined with weakened on-chain activity, such as declines in active addresses and transfer volumes, BTC may pull back in the coming weeks.
However, this outlook may be negated on Wednesday (July 30). The White House is expected to release a strategic crypto policy report, which may introduce a Bitcoin reserve framework and delta-neutral accumulation strategies, potentially boosting spot ETF flows and BTC treasury building.
Additionally, this week's Federal Open Market Committee (FOMC) meeting is highly anticipated. While no interest rate cuts are expected, given the consistently neutral tone in July, this outcome may have already been largely priced in. However, any dovish comments from Fed Chair Powell could shift market sentiment. If Powell hints at a possible rate cut in September, the market may anticipate this, pushing BTC above $123,000 and setting new highs.
Related: BitMine's $1 billion buyback plan currently leans more towards stocks rather than more Ethereum (ETH)
Original: “Bitcoin (BTC) bulls aim to chase liquidity at $122K, but Q3 seasonality could stall breakouts”
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