TLDR
Bitcoin price briefly fell below $117,000 after $800M in long position liquidations
Analysts debate whether this represents healthy consolidation or a deeper correction
Critical support levels identified at $116,000-$117,000, with resistance at $120,000
Treasury policy stance and inflation data influenced market sentiment
Many analysts project potential Q4 rally with targets of $130,000 or higher
Bitcoin has faced renewed pressure recently as a wave of liquidations sent prices briefly below the $117,000 mark. The world’s largest cryptocurrency experienced over $800 million in long position wipeouts, triggering a debate among market watchers about whether this represents a healthy pause in the uptrend or signals a deeper correction ahead.
At press time, Bitcoin trades near $118,000, having stabilized after testing key support levels.
The price action comes after Bitcoin reached a new all-time high above $124,000 just days ago. The subsequent decline produced two consecutive bearish daily candles, increasing caution among investors who are closely monitoring for any potential shift in momentum.
Technical analysts have identified $120,000 as the nearest resistance level. This zone is reinforced by volume profiles and anchored by the volume-weighted average price (VWAP).
More immediate support appears close to $118,200, with stronger demand centered near $116,300. This area aligns with the 200-day exponential moving average, daily support, and Fibonacci retracement levels.
Momentum indicators are delivering mixed messages in the current market environment. The four-hour chart shows the relative strength index (RSI) signaling hidden bullish divergence, which hints at potential for a rebound.
On the daily timeframe, however, bearish divergence suggests the possibility of continued selling pressure in the short term.
Market Sentiment Shaped by Economic Factors
Market mood has been influenced by recent developments in Washington. Treasury Secretary Scott Bessent clarified earlier in the week that the US government would not purchase Bitcoin directly to expand reserves.
Instead, the Treasury plans to rely on confiscated assets. Analysts note this approach removes the prospect of steady reserve accumulation by the government.
This policy makes Bitcoin price more vulnerable to macroeconomic shifts. Bessent stated that reliance on seizures makes future supply growth less predictable for government holdings.
The Treasury policy announcement coincided with stronger-than-expected Producer Price Index data, which reignited inflation concerns among investors.
These economic figures pressured broader risk assets, including digital tokens, as market participants adjusted their expectations for interest rates.
Market strategists observed that the combination of Treasury policy clarification and inflation data created a challenging backdrop for risk appetite in the short term.
Whale Activity Signals Long-Term Confidence
While smaller traders have shown caution, blockchain monitoring firms report accumulation by large holders, commonly referred to as whales in the cryptocurrency space.
Data indicates that some whales increased their BTC holdings during the recent downturn, reflecting confidence in the asset’s resilience despite short-term volatility.
Many large investors are positioning ahead of the 2025 halving, an event that will cut mining rewards in half. Historically, these halvings have reduced token supply growth and often coincided with upward price cycles.
Some on-chain metrics suggest changing behavior among short-term holders. CryptoQuant data indicates that the Short-Term Holder SOPR remains above 1, meaning these investors are realizing profits on their positions.
However, this trend appears to be slowing, with a decrease in the size of profit-taking noted since the beginning of 2024. The divergence between price tops and SOPR tops suggests declining profit margins, potentially signaling some market instability in the near term.
Despite these short-term fluctuations, Bitcoin maintains its overall bullish structure. The market continues to hold key levels well, particularly the $110,000 area. As long as price remains above this threshold, analysts suggest a high probability of another rally toward $130,000 or beyond by year-end.
$BTC August has been pretty uneventful for Bitcoin so far. We’ve seen some movement but no clear direction as price consolidates in this current range.
Never in history, has BTC seen both a green August and September. We tend to see a quick flush followed by an explosive Q4 in… pic.twitter.com/cClxJUG6Vh
— Daan Crypto Trades (@DaanCrypto) August 17, 2025
The action of Bitcoin’s price stands at a critical juncture. A breakout or breakdown from the current range is highly anticipated by investors watching for directional clues.
On the daily timeframe, BTC is positioned at the lower boundary of its long-term ascending channel. Weakness below this level could indicate a shift toward the $110,000 zone, which is firmly supported by the 100-day moving average.
August has been relatively calm for Bitcoin, with price consolidating in a range without showing a clear direction. This pattern may continue in the short term, but historical patterns suggest potential volatility ahead.
Bitcoin has seen few green months during August and September in previous cycles. A period of decline followed by a strong fourth-quarter rise has been customary in past bull markets. October and November have traditionally been strong months for the cryptocurrency.
The weeks ahead will be crucial in providing valuable insight into market direction, with the fourth quarter potentially serving as a pivotal time for Bitcoin’s price movement. If patterns from previous bull markets repeat, any pullback in the coming weeks could represent the last dip before a substantial end-of-year rally.
