Bitcoin’s recent decline from the $125K liquidity level has prompted a healthy correction towards the $120K area. This movement seems corrective, with strong support around the 100-day moving average.

Technical Analysis

Daily Chart

On the daily chart, Bitcoin faced resistance in the $125K–$126K liquidity zone, correlated with the previous swing high. This led to a retracement into the $117K–$120K support zone, reinforced by a converging trendline and key Fibonacci levels.

A possible recovery from this point could confirm it as a higher low, indicating bullish momentum. Yet, if it closes below $117K, the likelihood of a deeper correction to around $108K increases.

4-Hour Chart

The short-term 4-hour structure exhibits signs of diminished momentum following the breakout beyond previous highs. A critical support area has formed between $115K and $117K, with overlapping Fibonacci retracement levels. If this area holds strong, it could ignite new buying interest and spike towards $123K–$125K. On the contrary, failing to maintain this position indicates a trend change, exposing lower liquidity zones near $108K.

Sentiment Analysis

The one-week Binance liquidation heatmap reveals essential dynamics regarding Bitcoin’s recent setback. Significant liquidity clusters emerged between $124K and $126K, which align with short positions created in the upper price range. The unwinding of these contracts was a significant contributor to the downward pressure.

With new liquidity forming around $118K–$120K, it indicates possible points for price dips as over-leveraged positions face liquidation. Yet, the upper liquidity concentrations remain a target for institutional traders, suggesting potential acceleration towards $130K once broken.

The current scenario indicates a need for consolidation, as the market assesses the effects of the recent liquidation wave while gearing up for renewed momentum. As the demand zones stabilize and leverage resets, Bitcoin may be positioned for a surge towards the liquidity-rich $130K.