Key takeaways
BTC uptrend momentum has flipped to consolidation, and rising profit-taking could drag it to $110K or $105K. What’s next?
Bitcoin [BTC] has dropped about 4% this week, stretching its pullback from the all-time high (ATH) of $123K to $114K – A 7% retracement.
Overall, the bullish uptrend in July has now shifted to a consolidation mode, noted renowned BTC analyst Willy Woo.
He added that the asset could remain range-bound before attempting another breakout.
“Elevated speculation and profit-taking are dragging on momentum, signaling that BTC may need a reset or sideways grind before the next breakout attempt.”
Source: Swissblock
The attached chart showed high speculation (red) while profitability (SOPR, green) was elevated but steadily retreated as holders booked profits.
Additionally, momentum flipped negative, underscoring short-term caution.
Profit-taking meets increased hedging
Swissblock further painted the color of the current profit-taking, which surged to nearly $3 billion per day on average in July.
This reinforced a similar sell-off that marked the previous local price peak.
Source: Swissblock
However, the crypto analytics firm noted that the level of current sell-offs was still not as intense as the late 2024, which hit over $4.5 billion.
As such, this could be just a tactical cool-off, with an August breakout still on the cards, added Swissblock.
“Selling pressure is visible, but not extreme—think cooling, not capitulation…If macro/on-chain stays stable, a breakout reset is possible in August.”
This was slightly contrary to other market cycle top expectations by October amid increasing macro uncertainty.
Even so, the recent dump was marked by an increase in demand for short-dated call options (bullish bets), especially for 1-week (blue), 1-month (purple), and 3-month (green) tenors.
This was shown by the BTC 25 delta skew, which jumped 4% to 6% across the above tenors, underscoring a short-term bullish sentiment or short covering.
Source: Velo
In other words, Options traders expected a sharp rebound in the short term or hedged heavily to cover such a potential upside move.
At the same time, Deribit data showed that $105K put options were the most traded volume for the 8th and 22nd August expiries.
This meant that there was also heavy hedging for downside risk to $105K and $110K, for the next two weeks.
Source: Deribit
There was a surge in demand for calls eyeing $120K and $125K by the end of August.
But the demand on the spot market has dropped and flashed red for the first time since May, according to the Coinbase Premium Index (CPI).
This suggested that demand from U.S investors has eased in the past two weeks. A strong rebound in this metric could confirm a potential attempt for a breakout.
Source: CryptoQuant
Overall, BTC uptrend momentum has shifted amid a slump in spot demand and rising sell-off.
While short-term appeared tactically bullish, Options traders prepared for a potential dip to $105K and $110K.
