Bitcoin's recent price action has sparked discussions among traders about whether the cryptocurrency is nearing a significant local bottom after a period of decline. Despite an initial weekend drop, Bitcoin demonstrated resilience by retesting the crucial $112k demand zone and showing a subsequent 1.6% recovery, fueling optimism for a potential trend reversal. This retest, coupled with insights from various market indicators, suggests a pivotal moment for BTC.
Market Dynamics and Liquidity
Key analysis points to the exhaustion of selling pressure at critical levels. The liquidation heatmap, for instance, reveals that the magnetic zone between $112k and $114k has been "swept," indicating that immediate short-term liquidity has been absorbed. While the 4-hour market structure technically remains bearish and weekend trading volume was low—conditions not typically inspiring a trend reversal—the heatmap's findings present a strong counter-argument. This suggests a deeper fall might be less probable than a consolidation leading to an upward movement, potentially targeting the $120k resistance level.
On-Chain Insights and Confirmation
Further supporting this potentially bullish outlook are key on-chain metrics. Analysis of spent output age bands shows that recent selling primarily involved younger coins (1-day to 3-month old), while medium-term holders (3-month to 12-month old) largely refrained from selling. This indicates a lack of panic among more established holders, a positive sign. Additionally, the sharp drop in the Fear and Greed Index echoes patterns seen in June, where extreme fear preceded a recovery. For a confirmed bullish swing, traders are closely watching the $114.1k level; a successful flip of this into support would signal a more sustained upward movement, though minor dips remain a possibility.
