Bull-Bear Standoff

Bitcoin teeters at key levels as technical weakness clashes with strong macro tailwinds and record institutional positioning.

Key Takeaways

BTC tests key levels, forming a potential Head and Shoulders (H&S) reversal pattern
Bullish bias is supported by record commercial longs and rising global liquidity
Conflicting signals persist, with bearish technicals but favorable macro trends

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Digital Asset Commentary

Crosscurrents of bullish and bearish evidence continue after Bitcoin hit a new all-time high (ATH) a few weeks ago. BTC has spent the past 30 days consolidating within its current range and has formed a classic H&S pattern, a potential bearish reversal signal. This pattern, common across all markets, is characterized by a peak flanked by two lower highs. Based on the pattern’s depth, the projected downside target is approximately $94k.

The critical support level, commonly known as the neckline, sits around $103k. This level was briefly breached on Thursday but quickly reclaimed in the days that followed. In strong bullish trends, it is not uncommon for bearish reversal patterns to be invalidated. This would be confirmed by a daily close above the right shoulder at $107k. An invalidation of the H&S pattern points to a measured move toward $120k, which also aligns with yearly pivot resistance. Additionally, BTC CME Futures Commitment of Traders (COT) data reinforces the bullish case. Commercial hedgers now hold a record net long position, which has steadily increased since the April price low.

A weekly bearish divergence has also emerged, with price making a higher high while the RSI forms a lower high, a classic signal of potential weakness. A similar divergence appeared at BTC’s 2021 ATH, though that occurred ahead of the Fed’s rate-hiking cycle, whereas the current setup comes as markets anticipate a potential easing cycle.

Meanwhile, global liquidity continues to expand, driven by growing debt and deficits across major economies and ongoing interest rate cuts. Gold appears to have recognized this macro shift, trading near its previous ATHs and forming an inverse H&S pattern, a strong signal of bullish continuation. Historically, a declining U.S. Dollar Index (DXY) and rising gold prices have tended to precede upward moves in BTC, suggesting a possible lead-lag relationship favoring bullish momentum in BTC.

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