Bitcoin finds support at $112K: Can buyers push BTC to $120K this week?
The fear and greed index dropped sharply in the first two days of August, showcasing a sentiment shift.
Key Takeaways
Bitcoin might be approaching a local bottom after making a 1.6% price jump from the $112k support level. Traders can wait for a move beyond $114.1k to confirm if such a reversal could materialize.
Bitcoin [BTC] saw a 1.88% drop over the weekend. The volatility has been muted compared to the end of the week, when BTC shed 4.5% in under two days.
It was an early positive sign that Bitcoin retested the $112k demand zone and was trading 1.6% higher at press time.
The liquidation heatmap showed that the magnetic zone at $112k-$114k had been swept. There was more liquidity to the south at $106.5k, but not every liquidity pocket needs to be visited.
An example of this would be toward the end of June, when BTC collected the liquidity at $99.8k and jumped higher instead of falling further to $97k, which was also a magnetic zone.
The liquidity to the north was sparse, but the highs at $120k were a likely price target. This statement assumes that Bitcoin has formed a local bottom and is ready to push higher. Let’s find out if this is likely the case.
Clues of a Bitcoin trend reversal
The 4-hour timeframe showed that the market structure remained bearish. The weekend saw below-average trading volume and volatility, hardly conditions that inspire a trend reversal.
It could be that price consolidates around $114k and continues the bearish trend on Monday.
The liquidation heatmap made an argument against this idea. So too did some on-chain metrics.
The spent output age bands showed that the younger age bands were the ones spending in recent days. The metric visually categorizes the BTC moved (transacted) on a day based on how old the coin was held before spending.
The 1-day to 3-month-old coins were the ones that saw a flurry of movement over the past two days, as prices fell to the $112k region.
The medium-term holders of 3-month to 12-month-old coins did not stir noticeably, especially compared to earlier in the month.
This was a sign that the medium-term holders did not participate actively in the recent selling.
The fear and greed index dropped sharply on the first two days of August. In June, the index went to neutral and even briefly touched fear levels before recovering. A similar scenario could unfold over the coming days.
In conclusion, the liquidation heatmap argued that BTC might have made a local bottom.
The price action and metrics highlighted here agree, although they do not rule out the potential for another minor dip toward $110k-$111k. Overall, traders have reason to prepare for a bullish swing.
The first sign of such a reversal would come if Bitcoin bulls succeed in flipping the $114.1k level to support.
