Last week, Bitcoin surged to a new all-time high, surpassing $124,000 for the first time in its history. However, the trading session on August 14 closed with a sharp pullback, forming a "bearish engulfing" pattern on the daily chart—a signal that often precedes further declines. After a brief consolidation period, the downward movement resumed. By Monday, BTC had fallen to its medium-term uptrend line. By Tuesday morning, the crypto was trading below it. This could cause the trend to break down, thus triggering a drop to $112,000.
The 50-day moving average (EMA 50), which provides strong support in early August, may limit a deeper correction of Bitcoin. Nevertheless, if sellers push prices below this level, the next target for the token will be $112,000. Further support could then be found near the EMA 100, which is currently around $110,000. The RSI indicator, having just turned down from neutral territory, provides room for additional downside.
According to Bloomberg analysts, profit-taking appears to be the primary driver behind Bitcoin's decline. The failure to sustain momentum after hitting a new high led to disappointment among traders and triggered long position closures. Moreover, investor caution is growing ahead of the upcoming central bank conference in Jackson Hole, set to begin in two days. This uncertainty is likely to suppress buying in the crypto market in the near term.
Besides, worries have been mounting around the recent usage of long-dormant Bitcoin wallets—those that have not seen any transactions for over three years. A similar surge in activity from them took place in March 2024, followed by a 30% drop in Bitcoin’s price. Sales from these older wallets have increased for over a month. In July, inflows to BTC ETFs helped offset this selling pressure, but more net outflows from these funds have been recorded in August. This shift suggests that retail investors are no longer countering the downward pressure on the crypto.
The following trading strategy may come into play:
Sell BTCUSD at the current price. Take profit: $112,000. Stop loss: $118,000.
This content is for informational purposes only and is not intended to be investing advice.
