Bitcoin (BTC) is presently entering a complex phase, characterized by recent downturns and evident resistance levels. When it lost support at $115,000, Bitcoin dropped off a cliff. After swiftly recuperating from the option expiration dump, it is currently trading at $115,019, having recently retested and bounced off the $112,000 support zone. The cryptocurrency is struggling against fierce resistance at $115,724 – preventing it from moving higher.

Technical Indicators Signal Resistance

There are a number of technical indicators that point to Bitcoin hitting major resistance. The 50-day and 100-day simple moving averages (SMAs) have now both crossed just above Bitcoin’s price, creating additional overhead resistance. This convergence of moving averages could develop into a danger zone for Bitcoin. This could hold the cryptocurrency back from realizing significant all-time highs in the near term.

The 200-day SMA support at ~$110,677 has been holding up strong despite this drama, keeping the macro higher low intact for now. This longer-term moving average has been an important support level that has historically stopped deeper corrections from Bitcoin. If Bitcoin is to continue its bullish momentum, it needs to retake the $115,724 level and hold above it.

The $115,724 level acted as important foundation support during a two-week consolidation period in mid-July. This further highlights its significance as a discrete critical price point. A push above this resistance, if successful, would indicate the return of buying momentum and open the door for additional upside.

Overheated Market Conditions

Two new trends are making people worried that Bitcoin has already reached an “overheated” phase. This chapter feels eerily similar to the 2021 and 2024 market tops. The Stock-to-Flow (S2F) model — a widely popular measure of Bitcoin’s scarcity — is being watched to determine if the market is getting too exuberant.

Looking back at history, when the S2F value goes above 3, it is a signal that Bitcoin is probably heading into an overheated territory. That’s an indication that the cryptocurrency is wildly overvalued. This overvaluation is often followed by acute corrections, as evidenced by history.

For example, during market corrections, such as in September 2021 when Bitcoin collapsed from $63,500 to $30,800. In one month in November 2021, it dropped from $67,000 to $15,800. Nearer in time, in early March 2024, Bitcoin’s price corrected down from $73,000 to $54,000 following a break into the overheated zone. These historical trends indicate that perhaps overexuberance is deserved when the S2F value starts indicating an overheat condition.

Strategic Outlook

With the rising interest in ETFs and the ongoing Bitcoin spot ETF debate, investors and traders alike are keenly focused on Bitcoin’s price movements. Bitcoin’s ability to reclaim the $115,724 resistance barrier will be paramount in dictating the short-term trend for this crypto giant.

If the crypto king can break and hold above this level, it would indicate the uptrend is resuming. In the alternative, a failure to do so might result in some additional downside, possibly forcing it to re-test the $112,000 support zone.